The document provides examples of grain farmers who have added value to their crops through on-farm processing. It discusses farmers who have started mills to produce flour, cereals, and animal feed. It emphasizes the importance of learning regulations and suggests starting small and perfecting products. Cooperatives are presented as another option, where farmers can pool resources to process grains into products like pasta or par-baked breads.
4. • Nutrient analyses to comply with FDA nutri- feed. More people than us would want it. Maybe
tional labeling requirements cost from $500 this is what we should do. It has taken much
to $6,000 per product. The costs of organic longer than we ever anticipated. I learned a lot
certification, licensing, permitting, and plant more about business than I ever wanted to know;
and scale inspections all add up. To satisfy we’re not business people. We’re farmers who
buyers’ requirements, the farm and process- are trying to get this thing started because we
ing plant have been certified by as many as think there’s a need for it.”
five different groups. The mill has its own siding platform where a
• Economies of scale determine the cost of dis- railroad car or truck can dump feed into a chute.
tribution. “It costs 15 to 30 There an auger picks it up and
cents a pound to ship a pal- carries it to a bucket elevator that
let. But I can send a semi- can take the grain anywhere in-
load for less than six cents a “We’re farmers who are side. Counting the outside bins,
pound.” trying to get this thing the mill can store about 20
Dave emphasizes that high started because we traincar loads in a number of dif-
quality is important. “Post-har- think there’s a need for ferent storage hoppers. This
vest handling and storage it.” gives the facility a lot of flexibil-
present a big opportunity for Gerry Coleman ity in creating custom mixes. The
farmers to improve quality, and mill has a full range of internal
they’ll be rewarded in the mar- equipment: grinders, mixers,
ketplace,” he says. “Most of the baggers, and equipment to
premium is for the extra care and service you steam, cool, and pelletize feed. It has chutes
provide that high-quality product.” above the truck loading area and a scale to weigh
Dave strongly encourages anyone consider- vehicles. A platform next to the bagging station
ing starting a value-added business to take the also facilitates truck loading.
University of Nebraska’s “From Product-to- Freshness is a primary concern—once a grain
Profit” course offered through the Food Process- is ground, it starts to oxidize. Another difficulty
ing Center Business Development Office (see Edu- is state regulations. “You have to register feed
cational Training Resources). He says it is the in each state where you sell it,” Gerry explains.
best entrepreneur-training program in the U.S. “You have to tell the department of agriculture
Of those who complete the course and then start there exactly what’s in it: protein, fat, fiber, etc.
their own business, 80% are successful, compared So there has to be enough volume for a mix in a
to a national average of only 8%. He also notes state to pay the registration fee there.”
that of those who take the introductory course, A similar operation is that of Mel Gelsinger
80% decide not to go into a value-added busi- in Robesonia, Pennsylvania (Cicero, 1995). When
ness. Mel switched from conventional to organic pro-
duction, he had trouble finding outlets for much
of his organic corn, soybeans, and small grains.
A NIMAL EED F Then he met some farmers who wanted to raise
their livestock organically but couldn’t find or-
Animal feed production is another niche for ganic feed. For six years, he sold whole corn and
grain growers. The Vermont Organic Grain Com- soybeans, and the farmers did their own milling.
pany was founded as a result of Gerry Coleman’s Then he was convinced to put up a mill. His
search for organic feed grain (Kittredge, 1995). fully computerized mill and storage bins cost
To put the story in a nutshell: Gerry and others $320,000. The mill became operational in 1982,
were looking for a bulk storage facility and found with his own crops accounting for only three per-
an abandoned grain mill instead. “We weren’t cent of his milling volume. It supplies feed for
looking for a facility like this. But we turned this broiler operations, dairy and beef cows, horses,
up and said, ‘Bingo!’ There’s a need for organic and exotic livestock.
PAGE 4 //GRAIN PROCESSING: ADDING VALUE TO FARM PRODUCTS
5. bakery and grain elevator, thus minimizing the
amount of borrowed money needed.
COOPERATIVES
OOPERATIVES For producers exploring the possibility of
forming a marketing cooperative, the best source
More than 1,000 North Dakota, Minnesota, of information is USDA’s Rural Business and
and Montana wheat farmers joined forces to form Cooperative Development Service (RBCDS). The
a cooperative to turn their top-quality hard am- RBCDS helps farmers and rural residents form
ber durum wheat into pasta. The Dakota Grow- cooperative businesses and improve the opera-
ers Pasta Company in Carrington, North Dakota, tions of existing cooperatives. They provide tech-
produces and markets spaghetti, linguine, nical assistance, conduct cooperative–related re-
fettuccine, macaroni elbows, and egg noodles. search, and provide informational products to
The company shipped its first product in Decem- promote public understanding of cooperatives.
ber 1993; it is now the third-largest pasta com- For additional information contact:
pany in the U.S. The farmer-owners’ initial in- USDA/RBCDS Cooperative Services
vestment of $12-million dollars (based on bush- AG Box 3255
els delivered, minimum 1,500 bushels) was used Washington, DC 20250-3255
to raise the $42–million capital investment that (202) 720–7558
built the mill and pasta plant. A nine-member e-mail: coopinfo@rurdev.usda.gov
board of directors, all active farmers, oversees http://www.rurdev.usda.gov/rbs/coops/
all aspects of the business. In May 2002, the mem- csdir.htm
bers of the cooperative voted to change to a com-
mon stock corporation. For additional informa-
tion about Dakota Growers Pasta Company, visit
<http://www.dakotagrowers.com/>.
Liz Reinhiller, who works with the Dakota
Growers Pasta Company, says that the coopera-
tive concept is a good one. If farmers who have
a crop that is special to their area can get together
and can find a market, they can put together a USDA/RBS Publications
business plan and build a solid business team. Available from ATTRA
She notes that some ventures have failed because (call 1-800-346-9140 to receive a copy)
they didn’t have a good marketing or business
plan, and may not have had a good management Cooperative Services: What We Do,
team with the best interests of the growers in How We Work
mind (Reinhiller, 1999).
How to Start a Cooperative
The Mountain View Harvest wheat growers’
cooperative in Colorado has gotten into the whole- Small Fresh Fruit & Vegetable
sale bakery trade with “par-baked” (partially Cooperative Operations
baked) breads (Campbell, 1997). This is a grow- Understanding Cooperatives: Ag
ing segment of the baking industry, in which
Marketing Cooperatives
breads and rolls are baked to within ten percent
of completion, then flash-frozen and shipped to Cooperative Feasibility Study Guide
restaurants. Critical to the birth of Mountain Cooperative Farm Bargaining & Price
View Harvest was a grant from USDA Rural Busi- Negotiations
ness and Cooperative Development Service for a
Cooperative Marketing Agencies-in-
business feasibility study. Members had some
ideas for products, but they knew they needed a Common
thorough marketing study to find out what was
truly promising. Grower-members raised $5-
million of the $6-million needed to purchase a
//GRAIN PROCESSING: ADDING VALUE TO FARM PRODUCTS PAGE 5
6. tana, and South Dakota for promotion and mar-
ket development of crops grown in the four-state
EDUCATIONAL AND
DUCATIONAL region. The Institute provides educational
courses, customized training, and technical as-
TRAINING sistance in many value-added, processing, and
marketing areas for northern crops.
RESOURCES Northern Crops Institute
Bolley Drive
Fargo, ND 58105–5183
A 2001 award from the USDA created the Ag-
(701) 231–7736
ricultural Marketing Resource Center (AgMRC).
http://www.northern-crops.com
The AgMRC brings together experts from four
The American Institute of Baking is a non-
of the nation’s leading agricultural universities—
profit center for education and research that of-
Iowa State University, Kansas State University,
fers correspondence courses, seminars, and cus-
the University of California, and Oklahoma State
tomized training, as well as books and technical
University—into an electronically based center to
bulletins on all aspects of baking.
collect and interpret information about value-
American Institute of Baking
added agriculture. The AgMRC will create an
1213 Bakers Way
electronic hub that connects producers and busi-
PO Box 3999
nesses to knowledge, research, organizations,
Manhattan, KS 66505–3999
business resources, and ongoing activities in the
(785) 537–4750, (800) 633–5137, Fax: (785)
agricultural sector. The Center has an online di-
537–1493
rectory listing value-added state resources (See
http://techserv.aibonline.org
Further Resources: Websites).
Kansas State University is the only univer-
Many state land-grant university departments
sity in the world offering a four-year degree pro-
of food science and state departments of agricul-
gram in milling and a separate program in bak-
ture are good places to begin gathering informa-
ing. Dr. Dale Eustace, head of the Department
tion. Some states have specific agricultural de-
of Milling, Kansas State University, offers this
velopment centers to assist their producers in
advice to farmers considering on-farm grain mill-
developing new agricultural products and mar-
ing:
kets for adding value to their farm products (see
• Stay with whole-grain flour. A stone mill for
Further Resources: Some State Sources of Value-
small- to medium-scale whole grain flour pro-
Added and Development Information).
duction can be purchased for $15,000 to
The Nebraska Food Processing Center Busi-
$20,000. A stone mill will work well for most
ness Development Office has an Entrepreneur As-
people. You can adjust the stones to get the
sistance Program that offers the “Recipe to Real-
appropriate grind, experimenting to see what
ity” seminar, “Product to Profit” individualized
suits your market. A tabletop grinder can be
consultation, and additional assistance to help
used, but the capacity of these is low.
existing businesses expand into new markets. For
• To process wheat into white flour, a business
information about these and other services, con-
would need to invest a million dollars or more
tact Arlis Burney at:
for the mill alone. Additional capital would
Nebraska Food Processing Business
be needed for other components of the facil-
Development Office
ity.
University of Nebraska–Lincoln
• Call your state capital to find out who handles
60 Filley Hall
regulations. In some states it is the depart-
Lincoln, NE 68583–0928
ment of agriculture. In other states it will be
(402) 472–8930, Fax: (402) 472–8831
another agency.
http://www.fpc.unl.edu/
Dr. Eustace is willing to talk with people who
The Northern Crops Institute is a collabora- call, and he can provide help specific to your situ-
tive effort among North Dakota, Minnesota, Mon- ation. He can be contacted at:
PAGE 6 //GRAIN PROCESSING: ADDING VALUE TO FARM PRODUCTS
7. Dr. Dale Eustace Don Hofstrand
Department of Milling 2023 S. Federal Ave.
Kansas State University Mason City, IA 50401
Manhattan, KS 66506 (641) 423–0844, Fax: (641) 423–2642
(785) 532–4063 e-mail: dhof@iastate.edu
e-mail: dde@wheat.ksu.edu
USDA Farmer Direct Marketing
http://www.ams.usda.gov/directmarketing/
SUMMARY
UMMARY index.htm
USDA Farmer Direct Marketing website is an
Resources for specific information on grain excellent source of publications, resources, and
processing are fairly scarce and hard to find. Most links to direct marketing materials. It also has a
of the farmers interviewed developed their prod- Farmers Market Directory and a Direct
ucts through their own trials and errors. Value Marketing Resources by State listing.
can be added to grains in many different ways,
resulting in the development of new products or University of Georgia Extension
the improvement of existing ones. Anyone in- http://www.ces.uga.edu/pubcd/b1051-w.html
terested in starting a food processing business Online publication Getting Started in the Food
has to spend a great deal of time looking for in- Specialty Business.
formation on such topics as federal and state
regulations, labeling, ingredients, packaging, fi- Illinois Institute for Rural Affairs
nancing, and marketing. http://www.iira.org/pubsnew/publications/
IVARDC_Other_5.pdf
Online publication Starting a Value-Added
FURTHER Agribusiness: The Legal Perspective.
RESOURCES Minnesota Department of Agriculture
http://www.mda.state.mn.us/dairyfood/
startingfoodbiz.pdf
WEBSITES Fifty-six page online publication Starting a Food
Agricultural Marketing Resource Center Business in Minnesota.
http://www.agmrc.org/
The Agriculture Marketing Resource Center North Dakota State University Extension
collects and interprets information about value- http://www.ext.nodak.edu/extpubs/agecon/
added agriculture. The Center is creating an market/ec1137w.htm
electronic hub that connects producers and Online publication Developing a New Co-
businesses to knowledge, research, Owned Agricultural Business: How Do We
organizations, business guidance, and ongoing Start a Value-Added Firm?
activities in the agricultural sector. The Center
has an online directory listing value-added state University of Tennessee Extension
resources. http://www.utextension.utk.edu/pbfiles/
pb1399.pdf
Mary Holz-Clause Online publication Getting Started in a Food
101B EES Building/Haber Road Manufacturing Business in Tennessee.
Ames, IA 50011
(515) 294–0648, Fax: (515) 294–0684
e-mail: mclause@iastate.edu
or
//GRAIN PROCESSING: ADDING VALUE TO FARM PRODUCTS PAGE 7
9. Home Flour Mill. By Walter B. Booker. The Bread Builders: Hearth Loaves and
VITA Publication. 14 p. $5.25. Masonry Ovens. 1999. By Daniel Wing
This mill is made almost entirely of wood. and Alan Scott. 253 p. Chelsea Green
Powered by a 1/4-hp electric motor, by wind Publishing Co., White River Junction, VT.
power, or by hand. Provides information about making old-
fashioned naturally fermented hearth or artisan
Order from: loaves of bread, and how to plan, build, and
PACT Publications operate masonry ovens.
1200 18th Street, NW
Washington, DC 20036 SOME STATE SOURCES OF VALUE-ADDED
(202) 466–5666, Fax: (202) 466–5669
email: pubs@vita.org AND DEVELOPMENT INFORMATION
http://www.pactpublications.com
California Small Farm Center
OTHER BOOKS
University of California
The following books are available from book- One Shields Avenue
stores and online booksellers. If a book is listed Davis, CA 95616-8699
as out-of-print, you may be able to obtain it (530) 752–8136, Fax: (530) 752–7716
through Interlibrary Loan; check with your local http://www.sfc.ucdavis.edu/
librarian. You may also be able to buy a copy
through an online used-book search site, such as Iowa Center for Crops Utilization Research
<http://www.bookfinder.com/>. Dr. Lawrence Johnson
1041 Food Science Building
Small-Scale Grain Raising. 1977. By Gene Iowa State University
Logsdon. Rodale Press, Emmaus, PA. 305
Ames, IA 50011
p. Out-of-print.
(515) 294–0160, Fax: (515) 294–6261
Covers production aspects of a large number of
http://www.ag.iastate.edu/centers/ccur/
grains, including corn, wheat, sorghum, oats,
and soybeans. Also provides information on
Illinois Value-Added Rural Development
harvesting, storage, grinding, and cooking.
Center
Three basic kinds of grinders are described: 1)
Illinois Institute for Rural Affairs
burr mills with either stone or steel burrs, 2) the
Stipes Hall 504
roller mill, and 3) the hammer mill. Of the
1 University Circle
three, Logsdon favors the burr or gristmill for
Macomb, IL 61455
grinding flour. He says that none of the whole
grain is lost in a burr mill, and generally 309 298-2674 or 800 526-9943
speaking, it grinds finer, although you may have http://www.value-added.org/
to run your meal through it twice to get the
finest flour. Kansas Technology Enterprise Center
214 SW 6th, First Floor
Adding Value for Sustainability: A Topeka, KS 66047
Guidebook for Cooperative Extension (785) 296–5272, Fax: (785) 296–1160
Agents and Other Agricultural http://www.ktec.com/erc/
Professionals. 1998. By Kristen Markley
and Duncan Hilchey. 110 p. DIANE Minnesota Agricultural Utilization Research
Publishing Company. Institute
Discusses the concept of value-added processing Michael Sparby
and how it contributes to sustainable PO Box 599
agriculture, introduces four enterprise owners Crookston, MN 56716–0599
who share their experiences in small-scale (800) 279–5010
processing, and presents a description of issues http://www.auri.org
involved in the start-up of a business.
//GRAIN PROCESSING: ADDING VALUE TO FARM PRODUCTS PAGE 9
10. Missouri Value Added Development Center Cicero, Karen. 1993. Feed for the east (coast).
143 Mumford Hall The New Farm. November–December.
Department of Ag Economics p. 35–38.
University of Missouri
Cramer, Craig. 1993. Shooting for the highest
Columbia, MO 65211–6200
average. The New Farm. November–
(877) ValueAdd (824–8233), Fax: (573) 884–
December. p. 26–29.
6572
http://valueadded.missouri.edu/ Hilgendorf, Ralph. 1999. Personal
index.htm communication. Welcome, MN.
Kessler, Karl. 1989. Starting small, thinking
Nebraska Cooperative Development Center big. The Furrow. November–December.
Jo Lowe p. 16–17.
The Atrium Bldg.
1200 “N” St., Suite 610 Kittredge, Jack. 1995. The Vermont organic
Lincoln, NE 68508-2022 grain company. The Natural Farmer.
(402) 471–2698, Fax: (402) 471–8690 Summer. p. 22–23.
Toll-Free (877) 814–4707 or (877) 496–5235 Nordhus, Larry. 1999. Personal
for NE only communication. Centralia, KS.
http://www.rdc.state.ne.us/coop/
Reinhiller, Liz. Dakota Growers Pasta
North Dakota Marketplace of Ideas Company, One Pasta Ave., P.O. Box 21,
Headquarters Carrington, ND 58421–0021, (701) 652–
Marilyn K. Kipp, Executive Director 2855.
411 Main Street West Vetter, David. 1999. Personal communication.
Mandan, ND 58554-3164 Marquette, NE.
(888) 384–8410, (701) 663–0150, Fax: (701)
663–1032
http://www.marketplaceofideas.com/ APPENDIX
Oklahoma Food and Agricultural Products
Research and Technology Center RESOURCES FOR FINDING CLEANING AND
148 FAPC
PROCESSING EQUIPMENT
Oklahoma State University
Stillwater, OK 74078–6055 Processfood.com
http://www.okstate.edu/ag/fapc/ 200 Daingerfield Road
Alexandria, VA 22314
Tennessee Agricultural Development (703) 684–1080, Fax: (703) 548–6563
Center http://www.fpmsa.org/productLocator/
University of Tennessee bakery/index.cfm
307 Morgan Hall An online search of bakery equipment, suppliers,
Knoxville, TN 37996-4521 and services provided by the Food Processing
(865) 974–3824, Fax: (865) 974–9492 Machinery and Supplies Association
http://www.utextension.utk.edu/adc (FPM&SA), a non-profit trade association
founded in 1885 to provide a business link
between food & beverage processors and
REFERENCES suppliers.
Campbell, Dan. 1997. Show me the dough.
Rural Cooperatives. May–June. p. 24–26.
PAGE 10 //GRAIN PROCESSING: ADDING VALUE TO FARM PRODUCTS
11. GrainNet http://www.meadowsmills.com
3065 N. Pershing Court Manufactures stone burr mills, or gristmills,
Decatur, IL 62526 ranging from 50 to 1250 lbs. per hour capacity,
(800) 728–7511, Fax: (217) 877–6647 along with other related bakery equipment.
http://www.MillingEquipment.com
An online Milling Equipment Buyer’s Guide The CS Bell Co.
that allows searches by company or by products 170 West Davis Street
and services. PO Box 291
Tiffin, OH 44883
Seed World (419) 448–0791, Fax: (419) 448–1203
380 E. Northwest Hwy. http://www.csbellco.com
Des Plaines, IL 60016–2282 Products include hammer mills and burr or
(847) 298–6622, Fax: (847) 390–0408 gristmills, and corn shellers. The hammer mills
Seed World is published monthly with an extra are recommended for livestock and poultry feed
issue in April. The U.S. subscription rate is preparation, grinding yard waste for compost, or
$30/year. The Annual Buyer’s Guide includes fruit, vegetable, and grain processing for table
contact information for suppliers of bag-closing use.
equipment, bag-filling machines, bags, bins,
blowers, cleaners, etc. Schmidt Flour, Inc.
Box 99
Implement & Tractor™ Maple Creek, Saskatchewan S0N 1N0
2302 West 1st Street (306) 666–4800, Fax: (306) 666–4838
Cedar Falls, IA 50623–1879 http://www.schmidtflourinc.com
(800) 959–3276, Fax: (319) 277–3783 Flour mills ranging in scale from 200 to 4000
Implement & Tractor™ is published bimonthly lbs. per hour, and a debranner.
with an extra issue in December. Subscription
rate is $30/year. Their Ag Equipment Buyer’s Forsbergs, Inc.
Desk Reference includes listing and contact PO Box 510
information for many various types of mills, 1210 Pennington Avenue
cleaners, etc. Thief River Falls, MN 56701
(800) 654–1927, (218) 681–1927, Fax: (218)
Feedstuffs 681–2037
Circulation Department http://forsbergs.com
191 S. Gary Ave. Gravity and screen separators, destoners, and
Carol Stream, IL 60188 hullers/scarifiers.
(800) 441–1410, (630) 462–2224
Feedstuffs Annual Reference Issue contains Seedburo Equipment Company
directories for companies supplying goods and 1022 W. Jackson Blvd.
services to the feed and feeding industries, Chicago, IL 60607
association and grain inspection agencies, and a (800) 284–5779, (312) 738–3700, Fax: (312)
listing of products and services. Reference 738–5329
Issues are available for $40. http://www.seedburo.com
CLEANING AND PROCESSING EQUIPMENT Machinery and equipment for small-scale
planting, harvesting, cleaning, and grinding of
MANUFACTURERS AND SUPPLIERS grains; some equipment specially designed for
Meadows Mills, Inc. research and quality control. Catalog available
1352 W. D Street on request.
PO Box 1288
North Wilkesboro, NC 28659
(800) 626–2282, (336) 838–2282, Fax: (336)
667–6501
//GRAIN PROCESSING: ADDING VALUE TO FARM PRODUCTS PAGE 11
12. Kansas Wind Power R & R Mill Company, Inc.
13569 214th Road 45 West First North
Holton, KS 66436 Smithfield, UT 84335–0187
(785) 364–4407 (801) 563–3333
http://www.kansaswindpower.net/ Hand cranked and motorized mills, primarily for
Grain_Mills.htm home use.
Source of various styles of grain mills.
GrainMaker
The Country Baker Wild West Machine
8751 N. 850 E Randy & Bonnie Jones
Syracuse, IN 46567 370 Sharrot Hill Loop
(866) THE–BAKER, (219) 834–2134, Fax: Stevensville, MT 59870
(219) 834–3993 (800) 965–3075
http://www.countrybaker.com/ http://www.grainmaker.com
cataloglist.cfm Hand cranked mills for home use.
Small-scale professional baking equipment and
grain mills. Heartland Ag-Business Group
1003 Central Avenue
C.F. Resources Fort Dodge, IA 50501
PO Box 405 (800) 247–2000
Kit Carson, CO 89825 http://www.farmequipmentguide.com
(719) 962-3228 Provides a free-of-charge locating service for all
http://www.cfamilyresources.com types of used farm equipment and machinery.
Small-scale professional baking equipment and
grain mills.
By Janet Bachmann and Lance Gegner
Lehman’s NCAT Agriculture Specialists
Dept. 2-KNK
Box 41
Edited by Richard Earles
Kidron, OH 44636
(888) 438–5346, (330) 857–5757
Formatted by Gail Hardy
http://www.Lehmans.com
Look under Kitchen Implements for the mills November 2002
and other equipment. Catalog is $3.
Country Living
14727C 56th Avenue NW
Stanwood, WA 98292
(360) 652–0671 IP140 / 138
http://countrylivinggrainmills.com
Manual and electric table grain mills. The electronic version of Grain
Processing: Adding Value to Farm
K-Tec Kitchen Products is located at:
1206 South 1680 West HTML
Orem, UT 84058 http://www.attra.ncat.org/attra-pub/
(800) 748–5400 or (801) 222–0888 grainpro.html
http://www.k-tecusa.com PDF
Offers an electric-powered table mill to grind http://www.attra.ncat.org/attra-pub/
corn, wheat, rice, soybeans, anything not wet or PDF/grainpro.pdf
sticky, at rate of over 1 pound per minute.
PAGE 12 //GRAIN PROCESSING: ADDING VALUE TO FARM PRODUCTS