Value-added small farm enterprises
Even though hundreds of potential new crops have been introduced to Hawai‘i during the past 200 years, few continue to be economically sustainable for family farms. This is due to the relatively high cost of labor, land, and materials in Hawai‘i, which gives an advantage to cheap imports. One way family farms can remain economically viable is to vertically integrate their operations, i.e., grow, harvest, process, package, and sell in ways that add value to their products. When planned and executed well, the time, effort, and resources put into adding value can increase profits along with revenue.
An example of successful value-added strategies is Kona coffee, whose 2008–09 Hawai‘i County production was approximately 3.3 million pounds (green beans), with a farm value of $21.7 million. The market value of Kona coffee increases considerably when including the value added to products by small farm enterprises in processing (e.g., roasting, brewing) and marketing (e.g., certified organic, estate-grown). For comparison, the value of the same quantity of coffee sold in the world commodity market as generic arabica coffee in 2008 would have been about $4.6 million dollars, a small fraction of the value obtained through value-added processing and marketing developed by Kona coffee producers. The Kona coffee model has been expanding outward with great success in many parts of Hawai’i (e.g., Ka’u, Hamakua, Maui, Kaua’i, and many other locations).
Using the same business principles as used for coffee in Hawai’i, value-added strategies can be developed for any crop. For example, farmer/processors and university extension have been working on developing local, value-added processing and marketing for several crops in Hawaii, including cacao, vanilla, and tea. Another successful example is the 12 Trees Project, which investigated the market potential of twelve promising fruits, particularly their culinary appeal to high-end restaurants, resulting in renewed interest in locally grown high-value specialty crops.
The process from idea to consumer includes many considerations about processing methods, shelf life, packaging, labeling, food safety, shipping, market testing, etc. Developing a successful line of value-added products from a crop may take many years of work, trial and error, and other investments. Aspiring farmer/processors can save hundreds of hours of independent research by consulting with farmers who have been successful in similar endeavors, university extension, crop groups (e.g., Hawai’i Tropical Fruit Growers, Hawai’i Organic Farmers Association, etc.), state and federal agencies engaged in food processing and businesses that sell processing equipment. Finally, there are written resources available for all tropical areas that have information about adding value to crops.
Family farms are only economically sustainable if they can produce high-quality products that are valued above cheap imports. Expanding value-added capabilities for local crops can have a multiplier effect on local agricultural revenues, while preserving our agricultural communities.
Craig Elevitch is a Director of the Hawai’i Homegrown Food Network and editor of a new series of extension publications covering 32 specialty crops that cover specific value-added and processing strategies. He is also editor of the new book, Specialty Crops for Pacific Islands, which will be shipping by July 15, 2011.