PROVIDING FARMERS THE TOOLS
TO MANAGE RISK
IN VALUE-ADDED VENTURES
National Risk Management Education Conference
St Louis MO, April 12-13, 2011
Winifred McGee,
Senior Educator, County Extension Director, Penn State Extension
Lynn Kime,
Senior Extension Associate, Penn State Extension
Agenda
•Expansion of Local/Regional Foods
•Consumer Expectations/Confidence in
Food Safety
•Tools and Strategies for Food Risk
Management
•Building the Curriculum
•Reinforcement and Impact through the
Participant Workbook
•Challenges and benefits of the project
Local Foods Preference Increases
• Demand for fresher, more nutritious foods
• Desire to support local economies and local
farmers
• Desire for better food security
– Safe growing and processing practices
– Enough food for all citizens
• Concern about environmental effects of food
transportation
Source: Measuring and Understanding Local Foods: The Case of Vermont, David S. Timmons,
University of Vermont (May 2006)
Advancement of Local Foods
• Initially, organic foods movement
• Increasing interest in “foods connected to a
particular place,” due to:
– Widely publicized food safety incidents
– Growing mistrust in standardized/mass food
production
– Ethical and environmental concerns
• How and where food is produced
• How food is transported
SOURCE: Consumer Support for Local and Organic Foods in Ohio M. K. Bean, The Ohio
State University (2008)
Indicators of Interest in Local Food
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Farmers’ markets
Community-supported agriculture (CSA)
Local food policy councils and coalitions
Community gardening
New emphasis on food security
Source: The restructuring of food systems: trends, research, and policy issues M. Koc and K.
Dahlberg. Agriculture and Human Values 16 (1999)
Increased State Buy-local Programs
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Connecticut Grown
Get Real, Get Maine
Massgrown
New Hampshire’s Own, A Product of Yankee Pride
Jersey Fresh
Pride of New York
Pennsylvania Preferred
Rhode Island-grown
Vermont Buy Local, it's just that simple
Statistical Support for Growth
• 136,817 farms (in 2007) selling agricultural
products directly for human consumption
– An 17.2 % increase from 2002 statistics
– $1.21 billion in direct sales nationwide
• Small farms (sales <$250,000) generated
56.7% of the total value of agricultural
products sold directly to consumers
• 93.3% of farms selling directly were family
farms (limited resource, P/T and lifestyle)
Source: 2007 Census of Agriculture USDA NASS
Consumers in a “Risk Society”
• Public questioning about modern life
outcomes/private concerns about risk
• Consumers handle food risks by modifying
consumption practices
– Demand for organic foods
– Demand for foods produced locally
• Psychological regaining of control over the
risks by knowing how/where food is made
SOURCE: Consumer Support for Local and Organic Foods in Ohio M. K. Bean, The Ohio
State University (2008)
What We Know…
• Consumers place high importance on:
– food safety
– freshness (harvest date)
– pesticide use on fresh produce
• They place somewhat lower importance on:
– whether the produce was locally grown
– whether the respondent could contact the
farmer who grew it
SOURCE: Leopold Center’s Marketing and Food Systems Initiative, IA State University
Consumers’ Believe that Food is Safe
Dependence on:
• Government regulations and oversight
(traditional inspections)
• Good business practices*
(farmers/food entrepreneurs’ practices)
• Fellow consumers
• Media quiet
• Personal Experience
Source: W.K. Kellogg Foundation, Survey Conducted by Cultural Logic (June 2005)
Consumer Expectations
Primary responsibility for food supply safety
(n=524)
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Government such as FDA, USDA, etc. 40.8%
Producer/Grower/Farmer 31.9%
Processor/Packager 9.2%
Supplier such as restaurant/supermarket 4.6%
Consumer 1.5%
Everyone 3.2%
Others 5.2%
Don't know/Not sure 3.6%
Source: Missouri Department of Agriculture/University of Missouri - Columbia
Translation of a Trend
• Farmers see direct marketing of fresh and
value-added products as
– Source of additional income (diversifying)
– Low cost, low risk(?) entry into agriculture
• Consumers see local foods as
– Regaining a feeling of “safe food”
– Opportunity to support the community
– Reducing the “carbon footprint”
How to mesh the opportunities and threats?
Case for Food Venture Risk Management
• U.S. customers depend on safety of food
• Traditional viewpoint is that most food is
produced in “factories,” and quality/safety
ensured through:
– Periodic plant inspections
– Sample testing
• Today’s consumers are more apt to scrutinize
– Where their food is grown/produced
– How their food is grown/produced
Reply to Consumer Expectations
• Determine appropriate tools to manage food
processes
• Identify their application to the ventures of
– Farmers adding value
– Local food producers
• Provide appropriate training to these
business owners for proactive response
Food Risk Education for Farmers
Address Five Key Risk Management Strategies:
• Good Agricultural Practices (GAP)/Good
Handling Practices (GHP)
• Hazard Analysis Critical Control Points
(HACCP)
• Adequate/correct Insurance Coverage
• Allergen notification
• Pro-active recall planning
Developing the Class
• On-line research of land-grant resources
• Selection of applicable printed and video
materials
• Focus group meetings – Extension team with
– Insurance broker collaborators
– Farmers successful in adding value
– Local food entrepreneurs
The Workshop Structure
• Designed as an “Annie’s Project II” class
– Interactive environment
– Discussion-based learning
• Learning facets include
– Video case study
– Panel discussion
– Turning point enabled participation
– Group breakouts (hands-on activity)
– Applied case study
Class Introduction
• The case for food risk management
– How food businesses are different
– Customer expectations
– Producer obligations
• The benefits of food risk management
– Protect the farm/business assets
– Agility in emergency response
– Peace of mind
GAPs/GHPs
Case study via video: Closing the GAPs:
Utilizing Good Agricultural Practices
New Mexico State University
Addresses:
– Worker hygiene in the field
– Proper maintenance of storage/work areas
– Safe use of crop protection agents
– Land history
– Transportation methods
HACCP
• Overview of HACCP (what, why and how)
• Discussion – application of HACCP
– Application of concept to participants’ situations
• Panel of Speakers
– Food safety instructor (Extension Educator)
– Co-packer
– Food entrepreneur
Business Insurance 101
• Overview of food business insurance
– Prepared by collaborating insurance
professionals
• Definition of liability terms: negligence,
strict liability, breach of warranty and various
consumer protection claims
• Turning point incorporated – Participants
“select” the court finding for scenarios
(practice the concepts)
Allergens
• Identification of 8 food allergen categories
• Discussion of why notification is important
– When allergens are ingredients
– When allergens are present in the kitchen
• Ways to assess allergens present
• Methods of consumer notification
• Small group activity – sample food products
critiqued about effectiveness of warnings
Proactive Recall Plan
• Rationale for recalls/for planning ahead
• Overview of food recalls
– Initiating incidents
– Roles of personnel
– Steps to be taken
– Costs (with and without this plan)
• Case study – two scenarios – course
participants complete the recall flowchart
Reinforcement/On-going Impact
• Take-home materials land-grant generated
fact sheets and publications
• Acting on “teachable moments”  referrals
to in-depth classes/workshops
• Individual application beyond-the-course
workbook
– Consider how a strategy applies/does not apply
– Commitment to action steps
– Risks and strategies matched
Current Challenges
• Course launch to public in December 2010
• Five sites identified and classes marketed
• All five workshops were not held
– Two workshops, no registrants
– Three workshops, limited registrants
• Identified problems
– Federal/state food safety tightening is “too new”
– New on-line registration system malfunctions
Future Plans
• Biggest work (designing the course) is already
accomplished
• Focus redirected to create “urgency” for
proactive food business risk management
• Capitalize on large “Food for Profit”
enrollments (as follow-on education)
• Train the local facilitators in one-to-one
marketing of program
Future Benefits
• Greater sustainability of farmers who
diversify through adding value
• Opportunity to offer insurance cost breaks for
“graduates” of this program
• Tangible ways for small-scale food processors
to compete successfully to supply to grocery
chains, restaurants, etc.
• Greater food safety for the general public
Discussion/Questions