1. 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

2. 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

3. 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)

4. 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)

5. Indicators of Interest in Local Food 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)

6. Increased State Buy-local Programs 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

7. 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

8. 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)

9. 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

10. 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)

11. Consumer Expectations Primary responsibility for food supply safety (n=524) 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

12. 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?

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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)

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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

28. Discussion/Questions