Assisting East Arkansas Farmers

For many years, the survival of family farms in the Mississippi River Delta region has been threatened by extremely low prices and limited markets. The overall goal of the project is to assist farmers in the region in pooling their resources, in order to access better markets and improve the profits of local farmers that produce crops such as soybeans, wheat, corn, and milo. This goal will be accomplished by conducting a feasibility study and market research for organizing a marketing cooperative and constructing a processing facility, enabling farmers to add value to their product before shipping it to various markets.

Successful value chain projects would lead to increased adoption of technologies and practices by smallholder farmers and others in the value chain and would generate the following kinds measurable benefits:

• Economic benefits from increased farm incomes, new related businesses, stabilized farm output prices, stabilized or decreased production input prices, and improved productivity of inputs like seed, labor, land, and water;
• Sustainability of the economic benefits as indicated by full-cost accounting and progress toward independence from financial subsidy;
• Increased access of poor households to markets as indicated by adoption of inputs, new technologies, and value-added activities; and
• Expansion of formal markets as indicated by regularity of input purchase, increased marketed share of production, use of financial services such as credit and banking, product branding, cooperative buying and selling, and geographic expansion of areas served by output purchasers and input sellers.

Assist farmers in a four-county area of eastern Arkansas improve their access to markets by conducting a feasibility study and an extensive market analysis for organizing a marketing network and constructing a processing facility.

1. Improved functioning of output markets (i.e., facilitating processing and value addition to crop and livestock products), improved access to those markets, and better price information.
2. Increasing smallholder farmers' access to information, knowledge about technologies, and capacity to organize and manage complex operations.
3. Improve structures affecting the incentives that bear on smallholder farmers, including regulatory environments, financial services, commodity standards, marketing boards, and business policies. Where possible, develop innovative strategic public-private sector partnerships that address these structures.

Conduct a feasibility study to look at three major issues: 1) market issues, 2) organizational and technical issues, and 3) financial issues .

Conduct an extensive market analysis including the following basic components: 1) estimation of the size of the market for the crops mentioned above, 2) projected market share, 3) information about the target market, and 4) analysis of the competition.

A meeting was held in late April 2009 to discuss the study's findings on the feasibility of operating an Individual Quick Freeze (IQF) vegetable processing facility in northeast Arkansas. The report examined market issues, organizational and technical issues, and financial issues. Conclusions from that report indicate that entrance into the IQF market will take time. Barriers of entry include high up-front costs and a market tightly controlled by a few large firms. In addition, the cost of labor coupled with the low margins for frozen vegetables provide a very low positive cash flow for the first two years of operation. This is not a desirable return on investment. In addition, building a processing plant from the ground up is not feasible as current market prices simply do not support the investment and operation costs. In order to compete effectively, it seems advisable for the farmers to strongly market their fresh Arkansas-grown products and to find a way to consolidate with the larger vegetable producers, such as Allens, a large packing company located in northwest Arkansas.

More recent activities involved scheduling a meeting to discuss ways of consolidating larger vegetable producers to provide produce for Allens. Since 1926, Allens has been packing a variety of products, including beans, greens, spinach, and sweet potatoes. It would be beneficial to farmers and Allens if they can make arrangements to use their packing facilities.

This meeting was held in Little Rock, Arkansas, on November 11, 2009. Attendees Annett Pagan, Winrock International, Steven Danforth, APInnovations, Inc., and Josh Allen, Allens discussed issues surrounding specialty crop production in eastern Arkansas. Allens is very interested in establishing a processing plant near vegetable production sites in eastern Arkansas. The location of the processing plant as well as produce that would be processed has yet to be determined. It was decided that more discussions need to be held, and another meeting was scheduled for mid-January, 2010.