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PLAN. PRODUCE. PROFIT. WORKSHOPS PLAN. PRODUCE. PROFIT. WORKSHOPS

UniversityofArkansasWorkshopTeam

ProjectDirector:Dr.ReneeThrelfall,ResearchSpecialist,InstituteofFoodScienceandEngineering

ProjectCo‐Director:Dr.JeanFrancoisMeullenet,Head,DepartmentofFoodScience

andDirector,InstituteofFoodScienceandEngineering

Dr.SteveSeideman,ExtensionFoodProcessingSpecialist,InstituteofFoodScience&Engineering

Dr.DanielRainey,AssociateProfessor,DepartmentofAgriculturalEconomics

RustyRumley,StaffAttorney,NationalAgriculturalLawCenter

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

These workshops are sponsored through a grant “Fostering

Enterprise Diversification to Expand Local Community Food Systems”

Southern Extension Risk Management Education grant program.

PLAN. PRODUCE. PROFIT. WORKSHOPS

ARKANSAS FOOD INNOVATION CENTER: FOOD SCIENCE DEPARTMENT, UNIVERSITY OF

ARKANSAS, 2650 N. YOUNG AVE., FAYETTEVILLE, AR 72704

WORKSHOP1:STARTINGAFOODPROCESSINGBUSINESS|complimentaryregistration

Thursday,January,29,2015from6‐8pm&Saturday,January31,2015from1‐3pm

WORKSHOP2:GUIDETOSTARTINGAFOODPROCESSINGBUSINESS |$20registration,includeslunch

Saturday,February21,2015from8‐5pm

WORKSHOP3:STARTINGYOURFOODPROCESSINGBUSINESS|complimentaryregistration

April‐June,2015 For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

In a series of three workshops, workshop participants will learn how to produce

commercial food products in our local food systems. Those attending the first and

second workshops will explore the process of taking a product from concept to the

commercial market as well as the fundamentals of starting a food processing business.

Participants in the third workshop will be selected on a competitive basis from previous

workshop attendees and will receive assistance from the personnel and use of the

facilities at Arkansas Food Innovation Center in commercializing their product.

PLAN. PRODUCE. PROFIT. WORKSHOPS

WORKSHOP 2: GUIDE TO STARTING A FOOD PROCESSING BUSINESS | $20 registration, includes lunch

Saturday, February 21, 2015 from 8 am-5 pm

Workshop Agenda

Workshop Overview

Produce Behind the Product

Business Plans and Marketing

Food Safety and Preservation

Food Processing and Equipment

Lunch Client Panel

Food Ingredients and Packaging

Food Product Labeling

Food Processing Regulations

Workshop Summary

Arkansas Food Innovation Center

Plan. Produce. Profit: Starting a Food

Processing Business

Renee Threlfall

Research Scientist

Institute of Food Science and Engineering

University of Arkansas

ARKANSAS FOOD INNOVATION CENTER

The Arkansas Food Innovation Center (AFIC) was

created to assist entrepreneurs and small businesses

with food product development and food

manufacturing.

AFIC is a part of the University of Arkansas System

Division of Agriculture.

The Center’s mission is to advance the local food

industry in Arkansas by providing a center to

encourage agribusiness through the establishment of

new food products and processing capabilities.

AFIC Video

https://www.youtube.com/watch?v=8LEGvNQygC8&feature=youtu.be

PRODUCTS

The Arkansas Food Innovation Center

specializes in assisting entrepreneurs in

developing and producing value-added

products mostly from fruits and vegetables.

Value-added products are created by using a

raw commodity to increase its value – cooked,

sliced, pickled, dried, etc.

Creating value-added products allows options

to use food crops that ripen during the summer

throughout the year

Product/Process Development

Our service center is a certified/inspected facility that can be used for product

development and to process products for commercial markets.

Assistance is available for required certification of products and the completion of

federally required documents.

Labeling

Creating your nutrition facts panel

Assuring your label conforms to federal requirements

Printing labels

Analytical Services

pH

Water activity (Aw)

Sugar level (Brix)

Shelf-life

Training

Workshops are offered on food processing topics

http://afic.uark.edu/Training.html.

SERVICES

Our Clients

FAYETTEVILLE PUBLIC SCHOOLS

Tomato sauce was

produced using Arkansas-

grown tomatoes and used

in public school cafeterias.

In 2013, 3,400 lbs of tomatoes

were produced into 221 gallons

(221 110 oz bags) of tomato

sauce.

In 2014, 6,280 lbs of tomatoes

were produced into 410 gallons

(410 110 oz bags) of tomato

sauce.

ARKANSAS HUNGER RELIEF ALLIANCE

Spaghetti sauce was produced

from Arkansas-gleaned tomatoes for

distribution in their food banks

network and to raise funds for their

program.

In 2013, 480-16 oz glass jars of spaghetti sauce

was produced.

In 2014, 14,000 lbs of tomatoes were produced into

8,808 16 oz glass jars of spaghetti sauce.

PINK HOUSE (pH) ALCHEMY

pH Alchemy produces flavored

simple syrups, and the products

are sold at local farmers

markets a local coffee house.

The company has processed

~1500 bottles of simple syrup.

GREAT FERMENTATIONS

Cat and John Swenson started

Great Fermentations to create

value-added products for their

farming operation and developed

fermented vegetable products

containing both probiotics and

prebiotics.

The products – Crunchy Kraut and

Jalapeno Slices – are sold at

Ozark Natural Foods, farmers’

markets and the Farmer’s Table

Café in Fayetteville.

BERNICE’S HUMMUS

Denise Rohr and A.B. Merritt are owners

of Bernice's Hummus, a product

developed and produced since April

2013.

Their product is marketed in Fayetteville

at Ozark Natural Foods and Marvin’s

IGA.

Farmhouse Cupboard

Meredith DeVera and Rachael

Harris are owners of Farmhouse

Cupboard launched in January

2014.

FarmhouseCupboardbakesand

sellsMacaroonChewies atthe

BentonvilleFarmer'sMarketand

retaildistributionsinArkansas

andOklahoma.

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

The workshops are sponsored through a grant entitled “Fostering Enterprise

Diversification to Expand Local Community Food Systems” from the Southern Extension

Risk Management Education grant program.

Arkansas Food Innovation Center

Highlight of Steps To Use AFIC

Mike Davis

JF Meullenet

Department of Food Science

Institute of Food Science and Engineering

University of Arkansas

Step 1: Tour

ContactMikeDavistoscheduleanappointmentto

tourtheAFICfacility:

mld014@uark.edu

(479)575‐3095

Pleasebepreparedtodiscusssomeoftherelevant

detailsassociatedwithmanufacturingyourproduct.

Alongwithanintroductiontothefacility,thetour

allowsustodeterminewhetherornotwehavethe

necessaryequipmentcapabilities.

Step 2: Contact ADH/FDA

ContactWilliam(Will)HastingsattheArkansas

DepartmentofHealth(ADH):

(501)661‐2576

william.hastingsjr@arkansas.gov

•CompletetheADHapplicationandsubmitthe$35

annualfee

•GototheFDA’swebsiteandregisteryourfacility:

http://www.fda.gov/Food/GuidanceRegulation/FoodFacil

ityRegistration/default.htm

Step 3: AFIC Agreement

YouwillneedaletterfromtheFoodScience

DepartmentpermittingtheuseofAFIC.

Step 4: Purchase Insurance

Productliabilityinsuranceisrequiredandmaybe

purchasedathttps://www.fliprogram.com/

Theannualcostfortheinsuranceis$299.

PleaselisttheUniversityofArkansasSystem‐Division

ofAgricultureasanadditionalinsured.

Step 5: Test Batch

•Werecommendthatyouprocessatestbatchor

twowhileyouarecompletingallofyour

paperwork.

•DevelopyourStandardOperatingProcedures(SOP)

•Productthatismadeintestbatcheswillnotbesold

butcanbegivenawayassamples.

Step 6: GMP Training

YoumustcompleteGoodManufacturingPractices

(GMP)trainingpriortoprocessing.Theworkshopis

hostedquarterlybytheDepartmentofFoodScience

&Engineering.

•Nocost

•1day/4hr

Step 7: Other Requirements

MikeDaviswillguideyouthroughtheremaining:

•Productrecallplan

•AllergenPlan

•FDAprocessingdocuments

•Packaging

•ProductLabels

•NutritionFactsPanels

•Others

PERSONNEL

Arkansas Food Innovation Center Contact

Mike Davis, AFIC Manager

479.575.3095, afic@uark.edu

Affiliated Scientists

Steve Seideman, Food Processing Extension Specialist

479.575.4221, seideman@uark.edu

Renee Threlfall, Research Scientist, Fruit Processing

479.575.4677, rthrelf@uark.edu

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

The workshops are sponsored through a grant entitled “Fostering Enterprise

Diversification to Expand Local Community Food Systems” from the Southern Extension

Risk Management Education grant program.

PLAN. PRODUCE. PROFIT. WORKSHOPS

Introducing the Robert M. Kerr Food and Agricultural Products

Center

William McGlynn

Oklahoma State University

What is the FAPC?

A multi-disciplinary center to support

value-added agricultural product

processing.

Offers technical assistance, business

planning assistance, and training

opportunities.

Some of the workshops we offer

•AccreditedBasicHACCPWorkshop

•BasicTraining(EntrepreneurialWorkshop)

•BetterProcessControlSchool

•BRCWorkshop

•CertifiedBarbecueJudgingClass

•ContinuousImprovementToolsforBeginners

•FoodSafetyforSmallFarms/Businesses

•FoodAllergenWorkshop

•FoodDefenseWorkshop

•FoodLabelingWorkshop (ONLINE)

•InternalAuditorCourse

•MarketingwithSocialMedia

•Quality101Workshop

•SQF:DevelopingandImplementingSQFSystems

Pilot plant services

•Fruitand

Vegetable

Processing

•Milling/

Baking

•Drying

•Canning

•Extracting

•Meat

processing

Other FAPC services

•Sensorytesting

•Chemical

analyses

•Labeling

assistance

•Process

Authority

testing

•Product

formulation/

Process

development

Visit the FAPC website for information

about services, workshops, and other

educational events.

http://www.fapc.biz

OklahomaStateUniversity

148FAPC

Stillwater,OK74078‐6055

Phone:405‐744‐6071

FAX:405‐744‐6313

fapc@okstate.edu

For More Information

PLAN. PRODUCE. PROFIT. WORKSHOPS

Concept to Reality

Steve Seideman

Extension Food Processing Specialist

STEPS TO STARTING A FOOD

BUSINESS

•Have an Idea or Concept

•Start Developing a Business/

Marketing Plan

•Decide Manufacturing Mode

•Get Sales

Step #1; Have an Idea or

Concept

•Come up with something.

•Anything just to start thinking. It will change over time

•Find a consumer need and fill it.

•Flavor ideas are not good. Find out “what is hot” in

the minds of consumers.

HAVEACREATIVEIDEA

•Somepeoplehaveabilityforthis.

•Havebrainstormingsessions

•Talktoalotofpeople.Somepeoplemaynot

appeartobebrilliantbuttheyarepotential

customersandtheyhavemoney

•Lookatthedairyfield‐ThemotherofCreativity.

•Gotootherplaces/things.E.g.dairyproducts,tools,

farming,otherculturesandlifestyles

SomeoftheBigNameEntrepreneurs

•Entrepreneur

WallyAmos

MaryKayAsh

HenryBlock

DebraFields

HenryFord

BillGates

LeonGorman

RayKroc

JWillardMarriott

DonTyson

SamWalton

•Businesstheydeveloped

FamousAmosChocolateCookies

MaryKayCosmetics

H&RBlock

Mrs FieldInc

FordMotorCo

MicrosoftCorp

L.L.Bean

McDonaldsCorp

MarriottCorp

Tyson’s

Walmart;Sam’s

WHEREDOIDEASCOMEFROM?

•Ideasareadimeadozen.Everyonehasideason

howtodosomethingcheaper,easier,faster,etc.

thanexistingcompanies.Thedifferenceisthat

entrepreneursmaketheirideasbecomerealities.

•Forexample,takeFamousAmosCookies.Anyone

canmakecookiesbuthetookhiscookiestothe

marketplacewherepeoplewhodon’thavetimeto

bakecanbuythem.

Step #2; Start Developing a

Business/ Marketing Plans

•Dr Rainey will cover in more detail.

•Just start thinking about your new product and who

will buy, how will they know about it, what are they

will to pay for it ?

•This is a game like Monopoly and you always win.

•Starts you dreaming about your business.

•Spend lots of time here. It will save you in the long

haul.

UNDERSTANDINGTHEMARKET

•Whoisyourcompetition?

•Howtolabel,packagetheproduct?

•Whatistheneededshelf‐life?

•Whatisafairprice?

•Howwillpeopleknowaboutyourproductand

wheretogetit?

UNDERSTANDINGTHEBUSINESS

•FoodChannels

•Whatwillitcosttoproducetheproduct?

•Distributionnetworks

•Whatarethedriversoftheproductline?

•Anybrandloyalty(e.g.bacon‐windowappearance,

brandname,consumerimage)

FOODCHANNELS

•Therearebasically2channelsinfooddistribution

1)Retail‐thegoalistogivetheconsumerwhatthey

wantatapricetheyarewillingtopay.Examplesare

furtherprocessingovercommodities.

2)FoodService(Restaurants)‐Makefoodproducts

thataddressrestaurantconcernssuchasfood

safetyandtheshortageofgoodlabor(Precooked,

marinated,seasonedetc).

3)Salesoverwebsitesarecomingalong.

THERETAILMARKET

•ThischannelrepresentsfoodstoreslikeWalmart,

Kroger,Dillons,etc

•Theyareveryconsumeroriented

•Heavyuponmarketing;Alltryingtogetconsumers

tobuytheirproduct.

•Crowded;Competitive

•Therearejusttoomanychoicestomake.

THEFOODSERVICECHANNEL

•Includesfastfooduptofinetableclotherestaurants

•Fastestgrowingchannel.

•Usebrokersfromlargefullservicedistributorslike

SyscoandU.S.FoodService tobrokersthatjusttake

orders.

•Thebrokersdothelocalsellingandcangofromjust

takingorderstodelivery.

•Notheavilymarketingoriented

FoodServiceSales

•Sincethe1970s,thepercentageoffoodeatenaway

fromhomehasbeensteadilyincreasing.In1999,

49%ofthefooddollarwasspentinfoodservice,

41%wasspentinretailstoresand10%atother

foodretailers(c‐stores,warehouseclubs).

RestaurantImpactAreas

•Labor

‐Highturnover(96‐106%annually)

‐Wages/Benefitsareup

‐Qualityofworkforceisdown.

•FoodSafety

‐FearofEColi/Listeria‐lawsuits

‐Linkedtolaborquality

RestaurantsDemanding

•Reducedlaborinthekitchen‐preportioned,

seasoned,marinaded,premade.Theywanttoheat

andserve.

•Precooked forfoodsafetyreasons

•Wantcreativemenuideasandnovelcooking

methods.“Showmesomethingnew”

TODAY’SCONSUMERSWANT;

•Aremoredemanding

•Aremoreadventurousinrestaurants

•Havemoredisposableincome.

•Olderaresickofselfdenialandyoungerleada

moredecadentlifestyle.

•Timestarved;Wantit“now”

DrivethroughconfessionalinCalifornia

“TootandtellorgotoHell”

StarbucksKioskinCaliforniachurches

NewChanges–lastfewyears

Consumersarenowwanting;

•TOkeeptheirmoneylocal

•TObuylocalfromlocalfarmers

•TOkeeptheirmoneyawayfrombig

companieswhouse“chemicals”

•Preferencefor“artisan”typefoods.

•Wantastorywiththeirfood–how

itcameabout.17 18

ValueAddedFoods

•Weliveina“ValueAdded”society.

•Manyofourgrandparentsorgreatgrandparents

raisedtheirownhogsandchickens,grewproduce

inagarden,madetheirownfurnitureandprobably

madetheirownfarmimplements.

•Inourcurrentsocietyandbecauseoftheindustrial

revolution,itisnowcheaperandeasiertobuypork,

eggs,produce,furnitureandfarmimplementsthan

itistomakeityourself.

AWordAboutMarketing

•Factsdonotsellaproduct.

•Emotionssellproducts.WatchsomeTVadssome

time‐Whatmessagearetheyselling??

•Forexample,Dockerspantsarenotsoldonthe

strengthofthematerialorstitchingbuthowwell

peoplewhowearthementicemembersofthe

oppositesex.Soundsridiculousbutitworks.

•Romanticizetheproduct.Makeitemotionally

appealinginsomewaytothecustomer.

Step #3; Decide on

Manufacturing Mode

•Copacker Mode

•Self-Manufacture

•Use the Arkansas Food Innovation

Center

•Cottage Industries Act

IfMakingYourself

•Regulations– FilingwithADHandFDA,specs,

Understandallregulatoryrulesofsafety(GMPs,

HACCP,SSOPs,SOPs,PrerequisiteControlPrograms)

•Designyourpackagingandlabel

•Doa“costbuildup”(allcosts)

•Areallingredientsnecessaryandfunctional?

•Istherightequipmentavailable?(bothsizeof

equipmentandadequateforpurpose).

•Willyoubegettingtheneededshelf‐life?

21 22

Step #4; Get Sales

•Try to sell your product. Go everywhere.

•Learn to live with rejection.

•Continue to refine your marketing strategy the rest

of your life. Always listen to your customers.

•Sell to everyone, everywhere. Never stop.

WORRIEDABOUTTHEBIGGUYS?

•Someentrepreneursworrythattheycannotcompete

withthebigmanufacturers.

•Understandthatbusinesses,overtime,willevolve.The

bigfoodcompaniesof50yearsagohavegonebythe

waysideandnextbusinesseshavetakenovertheir

territory.

•Whateveryourinvention,buildamootaroundit– Bill

Gates

•Rememberthebigfoodretailersofthe1950sand

1960s‐A&PandKroger?Theyarenotnearlyaslargeas

theyoncewereduetootherfoodretailerslike

Albertsons,Ralphs,Wegmans thatwereentrepreneurs

inthe1950sand1960s.

ProductDevelopment

ProductDevelopmenteffortsaimedat;

1)TotallyNewProducts–NachoCheese‐flavored

Doritos

2)Value–AddedProducts– Individuallywrapped

cheeseslices;IQFvegetables

3)ProductImprovements–selfrinsingpizzacrust

4)LineExtensions– cheesechunksinhotdogs

SomeoneElse’sSimplifiedConceptofProductDevelopment

Concept Market

Introduction

Contract

Manufacturin

Sales &

Marketing

Sales &

Brokerage

Package

Design

Nutritional Labeling

Regulatory

Compliance

Legal

Project

Valuation

Financial

Advertising

Promotion

Label

Design

Manufacturing

Storage Testing

Engineering Scale-up

Product

Development Final Product

Specifications

Materials

Specifications

QA / QC

Materials Testing

Manufacturing

Com

liance

Purchasing

Operations

Warehousing

& Distribution

Environmental

Compliance

Product Testing

Marketing

Research

Consumer

Concept

Validation

Prototype

Development

Equipment

Specifications

Materials Costing

Prototype

Development

Intellectual

Property

Transactions

Inve st me nt

Criteria

Budgeting

Financing

Production

Process

Specifications

Pricing

Competitive Analysis

Waste

Disposal

Supplier

Due-Diligence

Costing

Materials

Sourcin

Product Costin

Material

Specification

Technical Service

EntrepreneurProductDevelopment

Checklist

•Haveanidea

•SeeMikeDavis‐fillouthisform(packagingandequipment

issues?)

•SignUADocumentsandgetinsurance

•GetlabelapprovedthroughMikeDavis

•Makesmallpilotplantbatch–finalizeit

•Getlabels,packagingandingredientsordered

•Writeyourmanufacturingspecification,Registerwith

ArkansasDept HealthandFDA

•Makeproductionbatch‐ testit

•Startsellingit‐listentoyourcustomers.:“Seekfirstto

understand;thentobeunderstood.”

•Implementyourmarketingplan27 28

Photo courtesy of IFS&E

PLAN. PRODUCE. PROFIT. WORKSHOPS

For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

TheProduceBehindtheProduct

HorticulturalConsiderationsfor

Value‐AddedFoodProducts

LukeFreeman

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DepartmentofHorticulture

UniversityofArkansas

Whyprocessfreshproduce?

motherearthliving.com

Standpointofproducerorfarmer

•Shelf‐stableproduct

–Freshproducehasa

shortshelflife

–Abilitytosellproductin

off‐season

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Producerorfarmer

•Cashflowinoff‐season

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Producerorfarmer

•Maximizingreturnsfromaspecialtycrop

–Utilizingexcessproduce

–Valuefromproductthatisunmarketablethrough

freshmarket

–Productinoff‐seasonwhendemandishigh

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Foodproductentrepreneurs

•Horticulturalproductsaddflavor

–Fruits,herbs,spices

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Foodproductentrepreneurs

•Healthbenefitsoffruits &

vegetables

–Nutritionalvalue

–Antioxidants

–Pre‐biotics

USDANutritionFactsheets

Foodproductentrepreneurs

•Demandforlocal/organic

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•Nicheforunique

regionally‐basedproduct

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pub/summaries/summary.php?pub=407

Horticulturalconsiderations

•Consistentqualityandsupply

•Highqualityatharvest

•Coolchainduringtransportation

•Properstorage(handout)

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Otherconsiderations

•Labordemandsforprocessing

•Anticipatingyear‐roundproductsupply

•Foodsafety:farmtoshelf

udyam.co

brevidia.com

FruitandVegetableProductIdeas

afic.uark.edu

www.vegkitchen.com

Apples

(July– November)

www.simplyrecipes.com

www.shockinglydelicious.com

pkuperspectives.com

Blackberries

(June–July)

img.thrfun.com

grit.com

oliverwinery.com

Blueberries

(June–July)

https://lh5.ggpht.com/

Dried‐ http://kasorganics.com.au/

www.recipegirl.com

www.stonewallkitchen.com/

Grapes

(July– August)

www.hdwallpapersinn.com

www.thoughtpursuits.comg

www.centralohiowine.com

farm7.static.flickr.com/

Muscadines

(August– September)

www.societywellness.com/

addapinch.com/

www.pfiwestern.com/

bootleggerswine.com

Peaches

(June– August)

thefitfork.com

stellarosawines.com/

lh3.ggpht.com

denverspice.com

Strawberries

(May– June)

www.pbs.org

blog.sndimg.com

www.insockmonkeyslippers.com

GreenBeans

(June– October)

www.designedtonourish.com

yeehawpickles.wordpress.com

walmartimages.com

Beets

(April–May,November– December)

www.precisionnutrition.com

betcheslovethis.com

$8.99for16oz

unboundpickling.com

terrachips.com

Cucumbers

(May– October)

healthcareaboveall.com

$8.34for24oz

brooklynbrine.com

$15.00for33oz

mcclurespickles.com

Cabbage

(May– June,Oct–Jan)

img2.timeinc.net

maangchi.com facebook.com/GreatFermentations

$11.99for16oz

Milkimchi.com

Bubbies.com

Okra

(June– September)

www.vanwhole‐produce.com

tasteofamish.com

$8.99for16oz

unboundpickling.com

$24.29for12oz

daniellechips.com

Squash

(June– September)

blog.freshharvestga.com

friendsdriftinn.com

indulgy.ccio.co

Worldmarket.com

Tomatoes

(May– October)

i.telegraph.co.uk

www.mrshappyhomemaker.com

stoplookingetcookin.com

mybrotherssalsa.com

umaine.edu http://umaine.edu/publications/4135e/

Bulletin #4135, Storage Conditions: Fruits & Vegetables

Storage Conditions: Fruits & Vegetables

This bulletin was reprinted with permission from Kansas State

University Cooperative Extension Service, Manhattan, KS. Written

by Karen L. B. Gast, Extension specialist, Post Harvest and

Marketing.

For information about UMaine Extension programs and

resources, visit extension.umaine.edu.

Find more of our publications and books at

extensionpubs.umext.maine.edu.

Once a crop is harvested, it is almost impossible to improve its

quality. Losses of horticultural crops due to improper storage and

handling can range from 10 to 40 percent. Proper storage

conditions—temperature and humidity—are needed to lengthen storage life and maintain quality once the crop has

been cooled to the optimum storage temperature.

Fresh fruits and vegetables are living tissues, although they are no longer attached to the plant. They breathe, just as

humans do, and their composition and physiology continue to change after harvest. They continue to ripen and,

finally, they begin to die. Cellular breakdown and death (senescence) are inevitable, but can be slowed with optimal

storage conditions. Fresh fruits and vegetables need low temperatures (32 to 55°F) and high relative humidities (80 to

95 percent) to lower respiration and to slow metabolic and transpiration rates. By slowing these processes, water loss

is reduced and food value, quality and energy reserves are maintained.

Relative Humidity

Transpiration rates (water loss from produce) are determined by the moisture content of the air, which is usually

expressed as relative humidity. At high relative humidity, produce maintains salable weight, appearance, nutritional

quality and flavor, while wilting, softening and juiciness are reduced. Leafy vegetables with high surface-to-volume

ratios; injured produce; and immature fruits and vegetables have higher transpiration rates. External factors affecting

transpiration rates are temperature, relative humidity, air velocity and atmospheric pressure. High temperatures, low

relative humidity and high air velocity increase transpiration rates.

Relative humidity needs to be monitored and controlled in storage. A hygrometer or a sling psychrometer, not the

appearance of the produce, should be used to monitor humidity. Control can be achieved by a variety of methods:

1. Operating a humidifier in the storage area.

2. Regulating air movement and ventilation in relation to storage room load.

3. Maintaining refrigeration coil temperature within 2°F of the storage room air temperature.

4. Using moisture barriers in the insulation of the storage room or transport vehicle, and in the lining of the

packing containers.

5. Wetting the storage room floor.

6. Using crushed ice to pack produce for shipment.

7. Sprinkling leafy vegetables, cool-season root vegetables, and immature fruits and vegetables with water.

Table 1 lists the optimum relative humidity for the storage of several fruits and vegetables.

Temperature

Respiration and metabolic rates are directly related to room temperatures within a given range. The higher the rate of

respiration, the faster the produce deteriorates. Lower temperatures slow respiration rates and the ripening and

senescence processes, which prolongs the storage life of fruits and vegetables. Low temperatures also slow the

growth of pathogenic fungi which cause spoilage of fruits and vegetables in storage. Table 2 contains a list of fruits

and vegetables classified by respiration rates. Producers should give special care and attention to proper storage

conditions for produce with high to extremely high respiration rates—those crops will deteriorate much more quickly.

It is impossible to make a single recommendation for cool storage of all fruits and vegetables. Climate of the area

where the crop originated, the plant part, the season of harvest and crop maturity at harvest are important factors in

determining the optimum temperature. A general rule for vegetables is that cool-season crops should be stored at

cooler temperatures (32 to 35°F), and warm-season crops should be stored at warmer temperatures (45 to 55°F).

There are exceptions to this rule, though. Table 1 lists optimum storage temperatures for commonly grown Kansas

fruits and vegetables.

Freezing Injury. Temperatures that are too low can be just as damaging as those too high. Freezing will occur in all

commodities below 32°F. Whether injury occurs depends on the commodity. Some can be repeatedly frozen and

thawed without damage, while others are ruined by one freezing. Table 1 shows the highest freezing point for most

fruits and vegetables. Table 3 lists susceptibility to freezing injury. Produce that is likely to be injured by one freezing

is classified as “most susceptible.” The “moderately susceptible” produce will recover from one or two freezings.

Produce which is “least susceptible” can survive several freezings without injury.

Injury from freezing temperatures can appear in plant tissues as loss of rigidity, softening and water soaking. Injury

can be reduced if the produce is allowed to warm up slowly to optimum storage temperatures, and if it is not handled

during the thawing period. Injured produce should be marketed immediately, as freezing shortens its storage life.

Chilling Injury. Fruits and vegetables that require warmer storage temperatures (40 to 55°F) can be damaged if they

are subjected to near freezing temperatures (32°F). Cooler temperatures interfere with normal metabolic processes.

Injury symptoms are varied and often do not develop until the produce has been returned to warmer temperatures for

several days. Besides physical damage, chilled produce is often more susceptible to disease infection. Table 4 lists

susceptible fruits and vegetables, and characteristic symptoms of chilling injury.

Storage Facilities

Crops that require different storage conditions will need three different storage facilities.

Cold storage (temperatures 32 to 36°F).

Cool storage (temperatures 40 to 55°F).

Warmer storage (temperatures 55 to 60°F for sweet potatoes, squash, pumpkins or similar crops).

A recording thermometer can be helpful in determining whether storage facilities are maintaining ideal conditions and

are not fluctuating. A maximum/minimum thermometer could be substituted. The thermometer should not be the same

as the thermostat controlling the refrigeration equipment. Relative humidity also should be monitored with a

hygrometer or a sling psychrometer.

Controlling and monitoring temperature and relative humidity will enable a grower to maintain optimum conditions for

maximum storage life of the crop, and to minimize crop damage from chilling, freezing and/or too-high temperatures

and water loss from the crop. Close attention to storage conditions will yield returns through greater customer

satisfaction, less waste and spoilage, and in the flexibility to hold a crop without significant storage losses to wait for

better markets.

References

Hardenburg, R.E., A.E. Watada and C.Y. Wang. 1986. The Commercial Storage of Fruits, Vegetables, and Florist and

Nursery Stocks. USDA-ARS Agriculture Handbook Number 66 (revised) 136p.

Table 1. Commonly grown fruits and vegetables with recommended storage conditions for temperature and relative

humidity approximate storage life under optimum conditions and highest freezing points.

Commodity Temperature (°F) Rel. humidity (percent) Approximate

storage life

Freezing point (°F)

FRUITS

Apples 30–40 90–95 1–12 months 29.3

Apricots 31–32 90–95 1–3 weeks 30.1

Berries

- Blackberries 31–32 90–95 2–3 days 30.5

- Currants 31–32 90–95 1–4 weeks 30.2

- Elderberries 31–32 90–95 1–2 weeks —

- Gooseberries 31–32 90–95 3–4 weeks 30.0

- Raspberries 31–32 90–95 2–3 days 30.0

- Strawberries 32 90–95 3–7 days 30.6

- Cherries, sour 32 90–95 3–7 days 29.0

Cherries, sweet 30–31 90–95 2–3 weeks 28.8

Grapes, American 31–32 85 2–8 weeks 29.7

Nectarines 31–32 90–95 2–4 weeks 30.4

Peaches 31–32 90–95 2–4 weeks 30.3

Pears 29–31 90–95 2–7 months 29.2

Plums and prunes 31–32 90–95 2–5 weeks 30.5

Quinces 31–32 90 2–3 months 28.4

VEGETABLES

Artichokes, Jerusalem 31–32 90–95 4–5 months 28.0

Asparagus 32–35 95–100 2–3 weeks 30.9

Beans, dry 40–50 40–50 6–10 months —

Beans green or snap 40–45 95 7–10 days 30.7

Beans, lima 37–41 95 5–7 days 31.0

Beans, sprouts 32 95–100 7–9 days —

Beets, bunched 32 98–100 10–14 days 31.3

Beets, topped 32 98–100 4–6 months 30.3

Broccoli 32 95–100 10–14 days 30.9

Brussels, sprouts 32 95–100 3–5 weeks 30.5

Cabbage, early 32 98–100 3–6 weeks 30.4

Cabbage, late 32 98–100 5–6 months 30.4

Cabbage, Chinese 32 95–100 2–3 months —

Carrots, bunched 32 95–100 2 weeks —

Carrots, mature 32 98–100 7–9 months 29.5

Carrots, immature 32 98–100 4–6 weeks 29.5

Cauliflower 32 95–98 3–4 weeks 30.6

Celeriac 32 97–99 6–8 months 30.3

Celery 32 98–100 2–3 months 31.1

Chard 32 95–100 10–14 days —

Chicory, witloof 32 95–100 2–4 weeks —

Collards 32 95–100 10–14 days 30.6

Corn, sweet 32 95–98 5–8 days 30.9

Cucumbers 50–55 95 10–14 days 31.1

Eggplant 46–54 90–95 1 week 30.6

Endive and escarole 32 95–100 2–3 weeks 31.9

Garlic 32 65–70 6–7 months 30.5

Greens, leafy 32 95–100 10–14 days —

Horseradish 30–32 98–100 10–12 months 28.7

Jicama 55–65 65–70 1–2 months —

Kale 32 95–100 2–3 weeks 31.1

Kohlrabi 32 98–100 2–3 months 30.2

Leeks 32 95–100 2–3 months 30.7

Lettuce 32 98–100 2–3 weeks 31.7

Melons

- Cantaloupe (3/4 slip) 36–41 95 15 days 29.9

- Cantaloupe (full slip) 32–36 95 5–14 days 29.9

- Casaba 50 90–95 3 weeks 30.1

- Crenshaw 45 90–95 2 weeks 30.1

- Honey Dew 45 90–95 3 weeks 30.3

- Persian 45 90–95 2 weeks 30.5

- Watermelon 50–60 90 2–3 weeks 31.3

Mushrooms 32 95 3–4 days 30.4

Okra 45–50 90–95 7–10 days 28.7

Onions, green 32 95–100 3–4 weeks 30.4

Onion, dry 32 65–70 1–8 months 30.6

Onion sets 32 65–70 6–8 months 30.6

Parsley 32 95–100 2–2.5 months 30.0

Parsnips 32 98–100 4–6 months 30.4

Peas, green 32 95–98 1–2 weeks 30.9

Peas, southern 40–41 95 6–8 days —

Peppers, chili (dry) 32–50 60–70 6 months —

Peppers, sweet 45–55 90–95 2–3 weeks 30.7

Potatoes, early crop 40 90–95 4–5 months 30.9

Potatoes, late crop 38–40 90–95 5–10 months 30.9

Pumpkins 50–55 50–70 2–3 months 30.5

Radishes, spring 32 95–100 3–4 weeks 30.7

Radishes, winter 32 95–100 2–4 months —

Rhubarb 32 95–100 2–4 weeks 30.3

Rutabagas 32 98–100 4–6 months 30.0

Salsify 32 95–98 2–4 months 30.0

Spinach 32 95–100 10–14 days 31.5

Squashes, summer 41–50 95 1–2 weeks 31.1

Squashes, winter 50 50–70 1–6 months 30.5

Sweet potatoes 55–60 85–90 4–7 months 29.7

Tomatoes mature—green 55–70 90–95 1–3 weeks 31.0

Tomatoes firm—ripe 55–70 90–95 4–7 days 31.1

Turnips 32 95 4–5 months 30.1

Turnip greens 32 95–100 10–14 days 31.7

Watercress 32 95–100 2–3 weeks 31.4

Table 2. Fruits and vegetables classified by their respiration rates (at 41°F).

Class Respiration

rate

Btu/ton/24

hrs

Commodity

Very low <5 Nuts, Dates, Dried Fruits and Vegetables

Low 5–10 Apple, Grape, Garlic, Onion, Potato (mature), Sweet Potato

Moderate 10–20 Apricot, Cherry, Peach, Pear, Nectarine, Plum, Cabbage, Carrot, Lettuce, Pepper,

Tomato, Potato (immature)

High 20–40 Strawberry, Blackberry, Lima Bean, Raspberry, Cauliflower

Very high 40–60 Artichoke, Snap Bean, Green Onion, Brussels Sprouts

Extremely

high

>60 Asparagus, Broccoli, Sweet Corn, Mushroom, Spinach, Pea

Table 3. Fruits and vegetables classified by susceptibility to injury by temperatures below 32°F.

Group 1, Most susceptible Group 2, Moderately susceptible Group 3, Least susceptible

Apricots Apples Beets1

Asparagus Broccoli, sprouting Brussels Sprouts

Beans, snap Cabbage, new Cabbage, mature and savoy

Berries (except cranberries) Carrots1Kale

Cucumbers Cauliflower Kohlrabi

Eggplant Celery Parsnips

Lettuce Cranberries Rutabagas

Okra Grapes Salsify

Peaches Onions (dry) Turnips1

Peppers, sweet Parsley

Plums Pears

Potatoes Peas

Squash, summer Radishes1

Sweet Potatoes Spinach

Tomatoes Squash, winter

1Without tops

Table 4. Fruits and vegetables susceptible to chilling injury when exposed to temperatures below their optimum

range and above 32°F.

Commodity Approx. lowest safe

temperature (°F)

Symptoms of injury from below – optimum

temperatures

Apples-certain cultivars 36–38 Internal browning, brown core, soggy breakdown,

soft scald

Asparagus 32–36 Dull, gray-green, limp tips

Beans (lima) 34–40 Rusty brown specks, spots, or areas

Beans (snap) 45 Pitting and russeting

Cucumbers 45 Pitting, water-soaked spots, decay

Eggplants 45 Surface scald, alternaria rot, blackening of seeds

Melons

- Cantaloupe 36–41 Pitting, surface decay

- Honey Dew 45–50 Reddish-tan discoloration, pitting, surface decay,

failure to ripen

- Casaba 45–50 Same as above, but no discoloration

- Crenshaw and Persian 45–50 Same as above, but no discoloration

- Watermelons 40 Pitting, objectionable flavor

Okra 45 Discoloration, water-soaked areas, pitting, decay

Peppers, sweet 45 Sheet pitting, alternaria rot on pods and calyxes,

darkening of seed

Potatoes 38 Sweetening

Pumpkins and hardshell

squashes

50 Decay, especially alternaria rot

Sweet Potatoes 55 Decay, pitting, internal discoloration; hard core when

cooked

Tomatoes

- Ripe 45–50 Water soaking and softening decay

- Mature-green 55 Poor color when ripe, alternaria rot

Information in this publication is provided purely for educational purposes. No responsibility is assumed for any

problems associated with the use of products or services mentioned. No endorsement of products or companies is

intended, nor is criticism of unnamed products or companies implied.

Published and distributed in furtherance of Cooperative Extension work, Acts of Congress of May 8 and June 30,

1914, by the University of Maine and the U.S. Department of Agriculture cooperating. Cooperative Extension and

other agencies of the USDA provide equal opportunities in programs and employment.

Call 800-287-0274 or TDD 800-287-8957 (in Maine), or 207-581-3188, for information on publications and

program offerings from University of Maine Cooperative Extension, or visit extension.umaine.edu.

The University of Maine does not discriminate on the grounds of race, color, religion, sex, sexual orientation, including

transgender status and gender expression, national origin, citizenship status, age, disability, genetic information or

veteran’s status in employment, education, and all other programs and activities. The following person has been

designated to handle inquiries regarding non-discrimination policies: Director, Office of Equal Opportunity, 101 North

Stevens Hall, 581-1226.



Introduction

s farmers struggle to ﬁnd ways to

increase farm income, interest in “add-

ing value” to raw agricultural products

has grown tremendously. The value of farm

products can be increased in endless ways:

by cleaning and cooling, packaging, process-

ing, distributing, cooking, combining, churn-

ing, culturing, grinding, hulling, extracting,

drying, smoking, handcrafting, spinning,

weaving, labeling, or packaging. (1) Today,

more than ever, adding value means “selling

the sizzle, not the steak.” The “sizzle” comes

from information, education, entertainment,

image, and other intangible attributes.

Because of the many regulations involved

with food processing, some people may

choose to add value in other ways. On a

larger scale, producer-controlled process-

ing for energy, ﬁber, and other non-food

uses are options. On a smaller scale, items

such as ﬂower arrangements, garlic braids,

grapevine wreaths, willow baskets, wheat

straw weavings, sheep and goat milk soaps,

and wool mulch are a few examples. In

addition, ideas for providing entertainment,

information, and other services associated

with direct marketing are abundant.

Besides offering a higher return, value-

added products can open new markets,

create recognition for a farm, expand the

Introduction ..................... 1

Capturing Value and

Creating Value ................ 2

Starting a Food

Business ............................. 3

Farm and Food Business

Proﬁle: Persimmon Hill

Berry Farm ........................ 6

Non-Food Options ........ 7

Keys to Success ............... 9

References ...................... 10

Further Resources ........ 11

Resources for Starting a

Food Business ................ 11

A Publication of ATTRA - National Sustainable Agriculture Information Service • 1-800-346-9140 • www.attra.ncat.org

ATTRA — National Sustainable

Agriculture Information Service

is managed by the National Cen-

ter for Appropriate Technology

(NCAT) and is funded under a

grant from the United States

Department of Agriculture’s

Rural Business-Cooperative Ser-

vice. Visit the NCAT Web site

(www.ncat.org/agri.

html) for more informa-

tion on our sustainable

agriculture projects.

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ATTRA

Contents

By Holly Born and

Janet Bachmann

NCAT Agriculture

Specialists

Adding Value to Farm Products:

An Overview

This publication discusses the concept of adding value to farm products, the differences between creat-

ing and capturing value, and the implications for value-added enterprises. It describes some different

approaches to adding value, including starting a food processing business, with a brief look at non-

food products. Resources to learn more about value-added agriculture and planning a value-added

enterprise are included.

Oats, barley, and some products made from them.

Photo by Peggy Greb. Courtesy of USDA/ARS.

Page 2 ATTRA Adding Value to Farm Products: An Overview

market season, and make a positive con-

tribution to the community. However,

adding value is not a panacea for all the

problems rural America is facing. It is a

long-term approach, not a “quick ﬁx.” It

requires the willingness and ability to take

on risk, as well as adequate capital, man-

agement skills, and personal skills—such

as the ability to interact with the public—

to succeed.

Capturing Value and

Creating Value

Brees et al. (2) make the distinction between

a strategy to capture value and a strategy

to create value. This distinction is impor-

tant to understand, because each strategy

offers speciﬁc opportunities and risks that

inﬂuence the success or failure of the value-

added venture.

For producers, capturing value usually

means capturing some of the value added

by processing and marketing. For exam-

ple, the producer’s share of the food dollar

has seen a steady decline since 1900. (3)

In 2005, the average farmer’s share of the

food dollar was 22 cents, down from about

33 cents in the 1970s. (4) The rest of the

food dollar goes to processing, distribution,

and marketing. More and more, produc-

ers are attempting to increase their share

of that food dollar by engaging in activi-

ties such as direct marketing to consumers,

turning farm products into food products,

and joining producer alliances and coop-

eratives that invest in facilities to process

their farm products on a larger scale.

Marketing directly to the consumer can

be done on a small or large scale and in

a variety of ways. Options for the pro-

ducer who enjoys direct contact with con-

sumers include selling at farmers’ markets

and through community supported agricul-

ture systems. Other options include sales

directly to restaurants and local institutions,

as well as mail order and Internet sales.

Large scale processing through producer

alliances, such as agricultural co-ops

or limited liability companies, has seen

growing interest among producers. These

alliances can offer a way to pool resources

and manage risks. In some cases, produc-

ers lose marketing or processing facilities

when corporate agribusinesses close local

facilities. For example, when Iowa turkey

farmers lost an Oscar Mayer processing

plant and feed mill, the producers formed

Iowa Turkey Growers Cooperative and

purchased the facility in 1996. (5) The

Iowa Turkey Growers Cooperative contin-

ues to produce and market whole and fur-

ther-processed turkey products year round.

Research from Purdue University (5) shows

that producers do stand to benefit from

diversifying into a value-added business

related to the producer’s product, when the

product is characterized by volatile prices

at the farm-gate level but relatively steady

prices at the wholesale or retail level. The

turkey industry is such an example, and

turkey producers beneﬁted from diversify-

ing into processing. In many cases, such as

livestock processing, economies of scale can

make it impractical for producer alliances

to own the entire processing plant, if the

alliance is not able to support an operation

large enough to achieve those economies.

With a captured-value strategy, producers

may face lower production risks, because

production processes are well known and

often linked to traditional agricultural pro-

duction. Even when producers themselves

are not familiar with processing, expertise

in those areas can be hired. Captured-

value ventures face an extremely competi-

tive marketing environment, where demand

is high, cost and efﬁciency considerations

are paramount, and high volumes of prod-

ucts must be processed in order to gain efﬁ-

ciencies of scale. These ventures are often

turning commodities into different commod-

ities and, while value is added, it may not

actually be captured by the producer.

For example, producer-owned coopera-

tives have attempted to enter the wet corn

milling industry. However, this industry is

extremely concentrated, with the top three

ﬁrms having more than 80 percent of the

market share for corn sweetener, one of

the most important wet milling products,

and similar market shares for the other wet

Direct Marketing

Publications from

ATTRA

Direct Marketing

Farmers’ Markets

Community

Supported

Agriculture (CSA)

Selling to

Restaurants

Bringing Local Food

to Local Institutions

Marketing Strategies

for Farmers and

Ranchers

Page 3

ATTRA

www.attra.ncat.org

milling products. In this case, one com-

modity, corn, is being turned into another

commodity, corn sweetener, and the pro-

ducer cooperative faces a marketing envi-

ronment in which it is almost impossible to

compete successfully. Indeed, two of the

most recent producer-owned cooperatives

that attempted to enter the wet milling mar-

ket, American Crystal Sugar’s ProGold facil-

ity and Minnesota Corn Processors, could

not compete and ended up being acquired

by the top three ﬁrms. (5) For more infor-

mation on getting off the commodity tread-

mill, request Moving Beyond Conventional

Cash Cropping from ATTRA.

A created-value strategy, on the other hand,

relies on products or services that are

unique or different from the mainstream

equivalent. These often include a real or

perceived quality attribute such as organic

certiﬁcation, a brand image, identiﬁcation

with a speciﬁc geographic region and/or pro-

ducer, identity preservation, environmental

stewardship, and so on. Creating value can

pose higher production risks than capturing

value. It usually requires learning new pro-

duction and marketing skills, dealing with

food safety, labeling, and other regulations,

and coping with liability issues and insur-

ance. Demand for the innovative product

or service must usually be created through

advertising, promotion, and consumer edu-

cation, and this is a lengthy, expensive pro-

cess. Marketing risks may be lower with

a created-value strategy, for if this demand

can be established, there is potential for

higher, stable prices and little direct com-

petition. Contract agreements for iden-

tity-preserved products such as high-lysine

corn reduce competition from other pro-

ducers, for example. On-farm events and

activities offer a unique setting that cannot

be copied by other producers. However,

producers will need to learn new market-

ing skills, carefully assess feasibility, and

develop marketing plans for created-value

products or services without established

marketing channels.

The amount of value that can be added is

affected by whether the enterprise is captur-

ing or creating value. Brees et al. (2) cite

two different approaches to adding value to

soybeans—a cooperative venture in a crush-

ing plant, using a captured-value strategy,

and producing a new “soy nut” product,

using a created-value strategy. The crush-

ing plant in their example added about $1

per bushel from the meal and oil produced.

The crushing plant faced narrow profit

margins and stiff competition, common

challenges for captured-value ventures,

where the processing and marketing risks

are relatively low.

Producing soy nuts that retailed for $3.95

per 9-ounce package, on the other hand,

added almost $420 of value per bushel.

While the markets for soybean meal and

oil are very large, the market for soy nuts,

and thus the total amount of value added, is

very limited. Product and market develop-

ment and compliance with food safety and

packaging laws all require time and money.

However, for the small-volume producer

who cannot compete with the large-volume

producers on price, targeting niche markets

with a created-value strategy offers the high-

est likelihood of success.

Many producers combine aspects of both

capturing and creating value in their ven-

tures. A producer may create an unusual

food product, such as local specialty bread,

and sell it at the farmers’ market, capturing

more of the food marketing dollar. Food

processors may use organic or unusual

ingredients, and so on.

Starting a Food Business

The food business is extremely competitive

and dominated by a few large companies

that are driven by cost and price consid-

erations. Food is considered a “mature”

industry, which means very little growth in

demand. Food manufacturing continues

to face narrowing margins and decreasing

proﬁts. Retailers are wielding more and

more power over food wholesalers and man-

ufacturers, and requiring manufacturers to

pay more for shelf space (“slotting fees”),

bear more of the product development risk,

and provide product uniformity and qual-

ity. Smaller processors could have trouble

Food Processing

Publications from

ATTRA

Grain Processing:

Adding Value to

Farm Products

Oilseed Processing

for Small-Scale

Producers

Edible Soybean

Production

and Marketing

Food Dehydration

Options

Sorghum Syrup

Value-Added Dairy

Options

Page 4 ATTRA Adding Value to Farm Products: An Overview

ﬁnding outlets for their products, if they

cannot meet scale requirements by the large

retail operations that dominate the indus-

try. In this mature industry, the only real

growth is in niche food markets, where pro-

ducers create value by adding special ser-

vices for consumers, offering quality attri-

butes like organic certiﬁcation, specialized

health products, and so on. They are able

to charge prices 30 percent or more over

mainline markets. Industry analysts agree

that these markets are likely to continue

to grow. (7)

The National Association for the Specialty

Food Trade (NASFT) defines “specialty

foods” as follows:

Foods, beverages, or confections meant for

human use that are of the highest grade,

style, and/or quality in their category. Their

specialty nature derives from a combination

of some or all of the following qualities: their

uniqueness, exotic origin, particular process-

ing, design, limited supply, unusual applica-

tion or use, extraordinary packaging or chan-

nel of distribution, the common denominator

of which is their unusually high quality. (8)

For more information and resources on the

specialty foods industry, visit the National

Association for the Specialty Food Trade’s

Web site at www.specialtyfood.com.

Consumers with special dietary needs—

both for speciﬁc health conditions and the

general health concerns of our aging pop-

ulation—offer more opportunities for new

products. For example, there are more than

two million Americans with life-long, incur-

able celiac disease, who must avoid all glu-

ten (from wheat, rye, and barley) in their

diets. Gluten-free foods have been difﬁcult

to ﬁnd and remain expensive, but for celiac

disease sufferers, they are well worth the

effort and expense. (9) For more informa-

tion on health conditions requiring special

diets, and the companies supplying these

special foods, visit www.specialdiets.org.

Other specialty foods options that have

paid off for producers include produc-

tion and marketing of unusually colored

or shaped, “heirloom,” and “ethnic” crop

varieties (request the ATTRA publication

Specialty Vegetables for more information).

Livestock can also be marketed as a spe-

cialty food, often in conjunction with reli-

gious or cultural celebrations and festivals

or events, to use in traditional recipes. For

example, meat goat and sheep produc-

ers have the options of serving many eth-

nic markets and providing special products

such as sheep for the Muslim Ramadan

holidays and cabrito (young goat) for the

Hispanic Easter market. Some produc-

ers even offer buyers facilities on farm

to slaughter according to Halal or other

religious requirements.

Some of the main challenges in food pro-

cessing include developing formulations

and preparation schedules, dealing with

regulations and regulatory agencies, prod-

uct coding and labeling, and product liabil-

ity insurance. (10) Researching the market

potential for food products is a crucial ﬁrst

step. You will need to have a good idea of

who will buy your product in the amounts

and prices that will generate a proﬁt for you.

For more information on market research,

visit www.agmrc.org/agmrc/business/

Case History:

Value-Added Agriculture

From Our Future’s on the Table (6)

Radiance Dairy, Francis and Susan Thicke, owners, Fairﬁeld, Iowa

Former Minnesota dairy producers Francis and Susan Thicke have oper-

ated Radiance Dairy in Fairﬁeld, Iowa, since 1992. When they took over

the herd of Jersey cows—a breed that produces high-butterfat, high-

protein milk that receives a premium price—the Thickes added more

value by turning the dairy into an organic operation.

Today, 99 percent of their organic whole, skim, and two-percent milk,

as well as cream, yogurt, and a soft cheese called Panir, are sold under

the Radiance Dairy label by three local grocery retailers. Chocolate- and

vanilla-ﬂavored soft-serve ice cream is sold in restaurants. Other prod-

ucts such as new yogurts and cheeses are in development.

What does value-added mean to the Thickes? According to Francis:

“Value-added products have features that go beyond what is gener-

ally found in the conventional market. Most people think value-added

means processing raw materials into a ﬁnished product. That’s true,

but value-added can be more than that. We believe organic products

are value-added because of the extra care that goes into making the

product. Radiance Dairy products really have two value-added features:

they’re organic, and they’ve been processed to deliver additional value

to our customers.”

Page 5

ATTRA

www.attra.ncat.org

startingbusiness/marketresearch.htm, and

see the Business Planning Resources

section below.

Once you have an idea for a food product

that you believe will appeal to consumers

in the marketplace, you need to develop a

detailed description of your product. This

description should include where you will

get all ingredients, a formulation (recipe),

a method of preparation, processing pro-

cedures, and packaging. Revealing the

amount of each ingredient or the spices in

your formulation is not necessary. This

should remain secret and be revealed only

to federal or state regulatory agencies.

Reliable suppliers for equipment, ingredi-

ents, and other supplies are critical to the

operation of a successful food processing

business. Identiﬁcation of reliable suppli-

ers is an important step prior to beginning

your business.

If you are uncertain about any of the details

needed in this plan, check with your county

Extension ofﬁce to see whether you can get

help from your land-grant university. Most

have a department of food science or food

technology, with staff who can help you in

the initial stages of product development. If

you work with a food technologist to develop

your product or process, you will be asked

for your complete formula. This informa-

tion will remain conﬁdential.

Bring as many details about your product as

you have, including a sample. The product

will be evaluated and classiﬁed regarding

the type of processing needed. This classi-

ﬁcation will be based on the product’s acid

and water contents.

Transferring recipes for food products made

in small batches or in a home kitchen to

commercial-size formulas that can be manu-

factured in larger batches using commercial

equipment is not an easy task. Frequently,

simply multiplying ingredient amounts to get

larger-size batches does not result in a prod-

uct comparable to that made with smaller

recipes. Plan on contracting with a state-

approved facility, such as a private-label

manufacturer, to manufacture a fairly large

quantity of your best formulation(s). This

will give you an opportunity to revise and

adjust your formula so that your ﬁnal prod-

uct is exactly the way you want it. Most pri-

vate-label manufacturers can also provide

formulation assistance. The county health

department may be able to help you with

information about such facilities located in

your county.

A key point to remember is that adding

value by processing food products increases

safety risks. Therefore, rules and regula-

tions are established to protect the public

health. Each state has its own regulations

about processing kitchens, and some local

governments have building codes that also

apply. If there is any possibility that you

will be selling your food out of state, you

must also comply with the federal regula-

tions as stated in the Federal Food, Drug,

and Cosmetic Act and enforced by the Food

and Drug Administration (FDA). The FDA

has what it calls Good Manufacturing Prac-

tices (GMP), upon which state regulations

are based. GMPs include requirements

that walls, ﬂoors, and ceilings be wash-

able, and the kitchen must be ventilated

so that drip or condensation from ceiling

or ﬁxtures won’t fall into food. Food con-

tact surfaces, tools, and equipment must

be resistant to corrosion and made of non-

toxic materials. Seams on surfaces must

be smoothly bonded to prevent accumu-

lation of food particles, dirt, etc. The

room must be screened to keep out birds,

insects, and other pests. You must have

a bathroom, if you have employ-

ees. You must have a hand-wash-

ing sink separate from sinks for wash-

ing, rinsing, and sanitizing equipment

and utensils. Water must be from an

approved source.

If your food product contains more than

ﬁve percent meat, you must have a USDA

Food Safety and Inspection Service inspec-

tor present during processing. You must

also comply with USDA regulations,

whether the product is sold in-state only or

out of state. The full description of GMPs

is printed in the Code of Federal Regula-

tions 21 CFR, Part 110, available on-line at

www.access.gpo.gov/nara/cfr/index.html.

Adding value

by process-

ing food

products increases

safety risks.

Page 6 ATTRA Adding Value to Farm Products: An Overview

All products need to include a product code

that shows where the product was packed,

the date and year packed, and the prod-

uct and batch number. Individual con-

tainers and cases should be coded. The

codes should be kept in records pertain-

ing to the product and should be written on

your invoices to identify distribution. The

codes provide a means of tracking a prod-

uct, should there be complaints or a recall

be necessary. Organic processing involves

additional record-keeping and other

regulatory requirements.

The label is the means by which consum-

ers identify your product, so time and

thought should be given to developing your

label. Both the state and the FDA have

very speciﬁc regulations concerning label-

ing requirements. Contact the appropri-

ate agency regarding information you must

include on the product label. The FDA

requires nutritional labeling if you do more

than $50,000 in business annually. The

regulations for nutritional labeling are quite

extensive, with very speciﬁc requirements

about information to include and the for-

mat for presenting this information. Details

of these requirements can be obtained

from any FDA office or the FDA Small

Business representative.

If you plan to sell your product through retail

stores, you should plan to display a Uniform

Product Code (UPC) on the label. This bar

code provides a means for automated iden-

tiﬁcation of your product. Brokers, whole-

salers, and retail buyers will not handle a

product without a UPC. It is your responsi-

bility to obtain a UPC for each product you

produce. Contact the Uniform Code Coun-

cil to apply for a UPC assignment. The fee

for assignment is based on the size of your

business. Contact:

Uniform Code Council

937-435-3870

937-435-7317 FAX

info@uc-council.org

www.uc-council.org/

ean_ucc_system/index.cfm

While it can be difﬁcult to ﬁnd a liability

insurance provider, and insurance may be

costly, product liability insurance is a must.

Many farmers’ markets and most retail out-

lets will require a minimum level (normally

$1 to 2 million) of product liability cover-

age before you can sell your products in

their markets. There are no standard rates

for liability coverage for food products,

because the premium depends on the spe-

ciﬁc characteristics of the product, the man-

ufacturing process, and marketing plan.

Most insurance companies require a great

deal of information—including submission

of production, distribution, and marketing

plans—even to provide a rate quote.

Product design and marketing tips

are covered in more detail in Fresh to

Processed: Adding Value for Specialty

Markets. (11) Created as a training and

resource tool for value-added processors,

with funding from the North Central Region

SARE program, Fresh to Processed: Adding

Value for Specialty Markets provides an over-

view of the main aspects of starting a food

business. Contact ATTRA for a copy of

this resource.

Farm and Food Business

Proﬁle: Persimmon Hill

Berry Farm

The story of Earnie and Martha Bohner’s

Persimmon Hill Berry Farm shows what

can happen when creative and persistent

farmers team up with supporters from the

state university, state department of agricul-

ture, and many others.

Although both Earnie and Martha trained

and worked in other professions, the small-

farm lifestyle of the southern Missouri

Ozarks appealed to them, and in 1983—

starting with no buildings, no electric-

ity, and no running water—the Bohners

began developing their pastured hill land.

They chose the name Persimmon Hill

because the farm was covered with young

persimmon trees. Within 10 years they were

cultivating three acres of blueberries, an

acre of blackberries, 2,000 hardwood logs

for growing shiitake mushrooms, and 120

apple trees. (12)

Contact the FDA by

mail, telephone, or

Internet:

Food and Drug

Administration

5600 Fishers Lane

Rockville, MD 20857

1-888-INFO-FDA

(1-888-463-6332)

www.fda.gov

Page 7

ATTRA

www.attra.ncat.org

The berries were initially marketed to pick-

your-own customers. The added value is

the experience of a day on a farm with a

friendly and helpful host. “We create a

place where people can enjoy themselves,”

Earnie says. Clean restrooms, a picnic

table, and shade trees provide for the com-

fort of visitors to the farm. Keeping the

ﬁeld edges mowed and trimmed contributes

to the clean image needed to attract visitors.

“People don’t come all the way out here to

get cheap food. They come because it’s fun,

and the berries are absolutely fresh. As

much as we can, we give them contact with

‘the farmers.’ The more we can do that, the

more people go away with that memory.”

In 1986 the Bohners began adding value

through processing. “After considerable

study, we decided to turn ripe berries into

full-fruit jams, although it would take more

work than the U-pick operation and spread

our management thinner,” says Martha.

“From the ﬁrst, we were committed to qual-

ity, and quality entails a lot of time and

cost. Our recipe is simple: fresh, ripe fruit;

sugar; natural pectin; a bit of lemon juice,

and nothing else. We want our product to

have a distinctive, berry taste.” Earnie

and Martha worked with a chef to perfect

recipes for other products such as shiitake

mushroom sauce. The ﬁrst products were

prepared in rented kitchens, a good way

to make the step without the cost of build-

ing your own kitchen. The Bohners now

have their own processing kitchen on the

farm, just a few steps from the blueberry

patch. The business office and storage

space are in the same two-story building.

Processed products (their famous blue-

berry Thunder Mufﬁns, a range of jams,

shiitake mushroom sauce, blueberry and

other barbecue sauces, dried shiitake spe-

cialties, a refreshing blueberry slush, and a

cookbook) now account for a large share of

the farm’s gross income. Processing fruits

and shiitake mushrooms allows them to use

produce that isn’t sold fresh, to extend the

marketing season and to diversify their

marketing outlets. The Bohners have sold

as many as 1,400 Thunder Mufﬁns in a

single day, and Martha Bohner says the

mufﬁns carry the farm through the unprof-

itable winter months. (13)

Direct marketing is another way to add

value. In addition to U-pick and farm stand

sales, the Bohners have created a Christmas

gift mail-order market. Previous custom-

ers and gift recipients receive a mail-order

folder describing packages that will be sent

directly to them. The cover of the ﬂyer

features the farm’s black Labs shown watch-

ing St. Nick’s sleigh heading off into the

Ozark night.

Business planning has been critical to

the development of Persimmon Hill Berry

Farm. Earnie tries to reorganize each Jan-

uary, after he reviews production and mar-

keting records for the previous season. He

adjusts long-range plans, sets goals for the

next 12 months, and then breaks down

jobs by two-week periods. Earnie says,

“In an ideal situation, I would look at these

goals monthly. On a daily basis, I have a

list that I carry with me that supports the

overall plan.” He is always looking for

ideas for new products, niches, and ser-

vices. In regard to ﬁnding help for busi-

ness planning, Earnie says, “SCORE has

been really helpful.” (SCORE, the Ser-

vice Corps of Retired Executives, is a Small

Business Administration program. For

more information on SCORE, request the

ATTRA publication Agricultural Business

Planning Templates and Resources.) “We

also have had graduate students from a uni-

versity business department out here. It is

a useful experience for them, and they can

give a business owner another perspective.

And we get lots of ideas from Ron Macher’s

Small Farm Today magazine.” Beyond the

ﬁnancial aspects of the business, a visit to

the farm will show anyone that a vision for

a beautiful place in the country and love for

life are driving forces. To pay a virtual visit

to the farm, visit www.persimmonhill.com.

Non-Food Options

The difficulty of coping with regula-

tory requirements, as well as the highly

competitive nature and the relatively

low margins of the food industry, have

“People

don’t

come

all the way out here

to get cheap food.

They come because

it’s fun.”

Page 8 ATTRA Adding Value to Farm Products: An Overview

led many producers to consider non-

food options for adding value to their farm

products. Some of these non-food options

are discussed below. Your options for add-

ing value with non-food products and ser-

vices are limited only by your resources

and your imagination.

Energy

Energy production from agricultural prod-

ucts is on the rise. It includes producing

biofuels, such as ethanol and biodiesel, and

electricity from crops, wastes, and wind.

Producers may be interested only in reduc-

ing on-farm fuel costs by producing biofuels

for their own use. Many producer groups,

on the other hand, have invested in biofu-

els manufacturing as a way to add value

to agricultural products such as corn and

soybeans. The viability of many of these

investments, such as corn producers invest-

ing in ethanol production, depends on gov-

ernment subsidies and programs. (5) The

Agricultural Utilization Research Institute’s

Center for Producer-Owned Energy offers

useful information on many biofuels options

on their Web site at www.mncpoe.org. The

ATTRA publication Biodiesel: a Primer

not only describes the process of making

biodiesel on-farm but also provides further

resources on many aspects of renewable

energy. For more information on energy

and agriculture, visit ATTRA’S Energy

and Agriculture section at www.attra.org/

energy.html.

Fiber

Organic cotton ﬁber is enjoying a develop-

ing market (14); however, these markets

are still limited and subject to competi-

tion from imported cotton. For more infor-

mation on organic cotton, request Organic

Cotton Production from ATTRA. There

are also small niche markets for natu-

rally colored cotton. The increasing con-

sumer interest in hand spinning, knitting,

and weaving has led to increased mar-

keting opportunities for sheep and goat

producers for organic, naturally colored,

hand-made wool, yarns, and other products,

as well as ﬁnished goods such as blankets

and clothing.

Wood

Woodlot enterprises, both timber and non-

timber, may offer another option. Request

a copy of Woodlot Enterprises from ATTRA

for more information. Another good place

to start investigating woodlot enterprises

is the WoodWeb at www.woodweb.com/

KnowledgeBase/KBIndex.html.

Personal Care Products

Adding value to products such as milk,

honey, and wax by producing soaps,

lotions, and other personal care products is

a popular option. The market for “natural”

personal care products reached $5 billion

in 2004, increasing by more than 50 per-

cent since 2000, and should continue to

grow. (15) Learn more about natural per-

sonal care products at www.soap-wire.com.

Farm Entertainment

According to Agriculture Specialist

Katherine Adam, in Entertainment Farm-

ing and Agri-Tourism, “While the popular-

ity of speciﬁc enterprises—such as pump-

kin patches or U-pick orchards—may ebb

and ﬂow, the public’s desire for a ‘farm

experience’ remains.”

Small diversiﬁed farms are ideally suited to

agri-entertainment. Unlike the mega-hog

facility or a corn/soybean operation producing

bulk commodities, the small farm can recre-

ate an earlier, simpler, human-scale vision of

Many farm machines at

ARS’ Beltsville Agricul-

tural Research Center

run on a mixture of die-

sel fuel and biodiesel,

which is made from soy-

bean oil.

Photo by Bob Nichols.

Courtesy of USDA/ARS.

Page 9

ATTRA

www.attra.ncat.org

farming. The chief qualiﬁcation for the rural

landowner who expects to make a living from

the land through agri-tourism is the desire

and the ability to cater to tourists and meet

their expectations of a farm visit.

Request a copy of Entertainment Farm-

ing and Agri-Tourism from ATTR A

for more information on many dif-

ferent options to add entertainment

and educational value to your farm and

farm products.

Keys to Success

Although no simple blueprint for success

exists when you’re trying to add value to

your farm products, a few general prac-

tices emerge from interviews with a number

of southern farmers. No matter how you

end up adding value to your farm products,

these principles apply.

Start small and grow naturally.

Make decisions based on good

records.

Create a high-quality product.

Follow demand-driven production.

Get the whole family or partners

involved.

Keep informed.

Plan for the future.

Evaluate continuously.

Persevere.

Capitalize adequately.

Focus.

•

Business Planning Resources

A comprehensive business plan that includes marketing and ﬁnances can help determine the feasibility of a value-added

enterprise. Developing your business and marketing plan helps you deﬁne your business, creates a road map to operate the

business, sets the goals you will aim for, and satisﬁes outsiders’ requests for a written explanation. The basics of a business

plan include the following.

What? Describe your product or service.

Why? Describe the need for your product or service.

Who? Describe the customer.

When? Draw a timeline and list all the tasks that need to be accomplished.

Where? Describe the location of your business.

Building a Sustainable Business: a Guide to Developing a Business Plan for Farms and Rural Businesses helps alternative and sus-

tainable agriculture entrepreneurs develop proﬁtable enterprises. Sample worksheets illustrate how real farm families set

goals, researched processing alternatives, determined potential markets, and evaluated ﬁnancing options. Blank worksheets

help producers develop detailed, lender-ready business plans and map out strategies to take advantage of new opportuni-

ties. It is available at no charge on the Internet at www.misa.umn.edu/publications/bizplan.html. Print copies are available for

$14 (plus $3.95 shipping and handling charge).

To order copies, contact:

Sustainable Agriculture Publications

210 Hills Building

University of Vermont

Burlington, VT 05405-0082

802-656-0484

802-656-9091 FAX

sanpubs@uvm.edu

Useful resources from ATTRA include:

Agricultural Business Planning Templates and Resources

Sources of agricultural business planning templates and other resources.

Enterprise Budgets and Production Costs for Organic Production

Sources of information on costs and returns of organic production.

Page 10 ATTRA Adding Value to Farm Products: An Overview

Establish a loyal customer base.

Choose something you love to do and something

that ﬁts your personality and goals.

These points are described in detail in the ATTRA

publication Keys to Success in Value-Added Agriculture.

Call ATTRA to request a copy. The publication also

provides farmer proﬁles and information about the

resources that they found useful.

Adding value to your farm products can be a great way

to increase farm income, diversify production, and enter

new markets. Understanding the risks and rewards of

different approaches to adding value, investigating the

wide range of options for adding value, and thoughtful

business planning are all important to success.

References

Richards, Keith, and Deborah S. Wechsler.

1996. Making It On the Farm: Increasing

Sustainability Through Value-added Process-

ing and Marketing. Southern Sustainable

Agriculture Working Group. 40 p.

Compiled from interviews with southern farm-

ers and ranchers who are adding value to their

products, it describes some of their practices, dis-

cusses 10 keys to success, and includes a list of

resources. Available for $12 (includes shipping

and handling) from:

Southern SAWG Publications

P.O. Box 324

Elkins, AR 72727

501-587-0888

ssfarm@lynks.com

Brees, Melvin, Joe Parcell, and Nancy Giddens.

No date. Capturing vs. Creating Value. MU

Agricultural Guide, University of Missouri

Cooperative Extension.

www.agmrc.org/agmrc/business/gettingstarted/

capturingvscreatingvalue.htm

Smith, Stewart. 1991. Is There Farming in

Agriculture’s Future? Presentation to College

of Agriculture and Life Sciences. University of

Vermont. November 14.

Anon. 2005. Retail Food Prices Rise Slightly.

Pork magazine. April 4.

www.porkmag.com/

directories.asp?pgID=678&ed_id=3305

•

Fulton, Joan. Value-Added Business Ventures

Through Producer Alliances. 2003. Purdue

University Cooperative Extension Service Pub-

lication ID-318.

www.ces.purdue.edu/extmedia/ID/ID-318.pdf

Our Future’s on the Table.

The Web site of an Iowa consortium seeking

to increase the value of Iowa farm products

includes links to a number of case histories.

Contact can also be made through the address

below.

Ag Initiative 2000 Consortium

200 East Grand Ave

Des Moines, IA 50309

515-242-4805

515-242-4832 FAX

Sparks Companies, Inc. 2003. Top-Down Com-

petition in the Food Industry: Trends and

Implications. Strategic Forum Discussion

Paper. Sept. 23. 46 p.

www.mda.state.mn.us/ams/whitepapers/

topdown.pdf

Food Industry Resources & Worksheets. Prod-

uct Development: Identifying Your Market Seg-

ment. Appalachian Center for Economic Net-

works (ACEnet) Food Ventures Web site.

www.acenetworks.org/frames/

framesfoodventures.htm

Choi, Candice. 2005. Gluten-Free Market Goes

Mainstream. Associated Press. July 27.

Brady, Pamela, et al. 1997. Starting a Food

Business. Institute of Food Science and Engi-

neering. University of Arkansas, Fayetteville,

AR. 6 p.

Durham, Deni. 1996. Fresh to Processed:

Adding Value for Specialty Markets. Missouri

Organic Association, Ashland, MO. 33 p.

Bohner, Earnie. 1998. Personal communication

with Janet Bachmann.

Anon. 2003. True blue: Loyal berry fans line

up across Missouri to get a taste of summer’s

sweetest treat. Columbia (MO) Daily Tribune.

June 29.

http://archive.columbiatribune.com/2003/jun/

20030629feat004.asp

10.

11.

12.

13.

Page 11

ATTRA

www.attra.ncat.org

Dimitri, Carolyn, and Catherine Greene. 2002.

Recent Growth Patterns in the U.S. Organic

Foods Market. U.S. Department of Agricul-

ture, Economic Research Service, Market and

Trade Economics Division and Resource Eco-

nomics Division. Agriculture Information Bul-

letin Number 777. 42 pp.

www.ers.usda.gov/publications/aib777/

Anon. 2005. Three Years of Double-Digit

Growth Powers the Natural Personal Care Mar-

ket to $5 Billion. Soap Wire Online. June 22.

www.soap-wire.com/2005/06/

three_years_of _.html

Further Resources

General Value-Added

The Ag Marketing Resource Center (AgMRC)

(www.agmrc.org) is an excellent electronic,

national resource for producers interested in

value-added agriculture. This comprehen-

sive Web site offers information on value-added

opportunities for agricultural commodities and

products, market and industry trends, learning

how to create and operate a business, research

results of value-added markets and businesses,

and how to locate national, state, and local

value-added resources. A comprehensive set

of directories, including agricultural innova-

tion centers, consultants, service providers, and

value-added businesses that can be contacted by

individuals with similar interests, and speciﬁc

resources for all 50 states, is available at www.

agmrc.org/agmrc/directories/.

Hamilton, Neil. 2000. The Legal Guide for Direct

Farm Marketing. Drake University Law

School. Des Moines, IA. 235 p.

This book is an excellent resource to help you

begin the process of learning about the rules and

regulations that may affect you. Prepared under

a grant from the USDA Sustainable Agriculture

Research and Education Program, it is

available from:

Agricultural Law Center

Drake University Law School

507 University Ave.

Des Moines, IA 50311

www.law.drake.edu

14.

15.

One great source of innovative, farm-tested ideas for

adding value and generating more income is

FARM SHOW magazine. For more

information, contact:

Circulation Department

FARM SHOW

P.O. Box 1029

Lakeville, MN 55044

800-834-9665

952-469-5575 FAX

circulation@farmshow.com

www.farmshow.com

Another source of ideas is Small Farm Today

magazine. For more information, contact:

Small Farm Today

3903 W Ridge Trail Rd

Clark, MO 65243-9525

573-687-3525

573-687-3148 FAX

800-633-2535

smallfarm@socket.net

www.smallfarmtoday.com

USDA Rural Business-Cooperative Services

offers two grant programs for value-added proj-

ect development. The Section 9006 Renewable

Energy System and Energy Efﬁciency Improve-

ment Grants provide grants and guaranteed

loan funds to farmers, ranchers, and rural

small businesses looking to ﬁnance a renewable

energy or energy efﬁciency project. Visit http://

attra.ncat.org/guide/n_z/renewable.html for

more information. The Value-Added Producer

Grant program makes grants available to inde-

pendent producers and producer groups for plan-

ning activities to establish a viable value-added

marketing opportunity for an agricultural prod-

uct or for acquiring working capital to operate a

value-added business venture. Visit http://

attra.ncat.org/guide/n_z/value_added.html for

more information.

Resources for Starting a Food

Business

In addition to the directories available at the AgMRC

Web site mentioned above, there are some other

resources that are especially helpful for starting a

food business.

Appalachian Center for Economic Networks

(ACEnet) runs the Food Ventures program,

which works with entrepreneurs in their service

area in the southeastern Ohio area to create

and grow specialty food businesses. ACEnet

also offers excellent advice and information on

their Web site at www.acenetworks.org/frames/

framesfoodventures.htm for anyone interested

in the specialty foods business.

Better Process Control School (BPC) is required

by federal regulations for any supervisors of

low-acid food thermal processing systems and

container closure operations. It is strongly rec-

ommended that anyone involved in any phase

of food processing who is not familiar with the

principles of food preservation attend this school.

Several universities hold a BPC school at vari-

ous times during the year. To locate a BPC

school near you and learn about the many other

training resources available, contact:

Food Processors Institute

1350 I Street, NW

Suite 300

Washington, DC 20005-3305

202-639-5945

800-355-0983 (toll-free)

202-639-5932 FAX

fpi@fpa-food.org

www.fpi-food.org

The Fooddude’s Food Marketing 101 at

http://www.fooddude.com/foodmarketing101.

htm is an on-line resource designed primarily for

potential manufacturers or marketers of specialty

food products. The purpose is to pose questions

(and provide some answers) for those interested

in producing food products for sale. Included is

information about retail trade channels; distri-

bution channels; product positioning, branding,

packaging, and pricing; packaged food sales;

marketing and promotion; customer service and

data use; as well as links to general resources

and food industry associations.

Getting Started in the Food Specialty Business

www.efsonline.uga.edu/EFS_NFB/

New%20Food%20Business%20Packet/

Getting%20Started%20in%20the%20Food%

20Specialty%20Business.pdf

Hall, Stephen F. 1992. From Kitchen to Market:

Selling Your Gourmet Food Specialty. Upstart

Publishing, Chicago. 190 pp. ISBN-0-

926894-34-2.

A good resource to determine whether your food

product has potential.

Exploring the Potential for New Food Products

http://msucares.com/pubs/publications/

p2170.html

Starting a Value Added Farm-Food Business

www.uwex.edu/ces/agmarkets/

Page 12 ATTRA

Adding Value to Farm Products: An Overview

By Holly Born and Janet Bachmann

NCAT Agriculture Specialists

Paul Driscoll, Editor

Cynthia Arnold, Production

This publication is available on the Web at:

www.attra.ncat.org/attra-pub/valueovr.html

and

www.attra.ncat.org/attra-pub/PDF/valueovr.pdf

IP141

Slot 136

Version 032206

PLAN. PRODUCE. PROFIT. WORKSHOPS

Business Plans to Marketing

Dr. Daniel V. Rainey

Agricultural Economics and Agribusiness

University of Arkansas

TheBusinessPlan

•Writtendocumentdescribingallrelevantinternaland

externalelements,andstrategiesforstartinganew

venture.

•Aroadmapforthebusiness.

•Anintegrationoffunctionalplans.

•Addressesshort‐termandlong‐termdecisionmakingforthe

firstthreeyears.

•Shouldbepreparedbytheentrepreneurin

consultationwithothersources.

•Entrepreneurcanmakeanobjectiveassessmentof

hisorherownskillsbeforedecidingtohirea

consultant.

Whoshouldwritethebusinessplan?

•Valuabletotheentrepreneur,potential

investors,orevennewpersonnel.

•Itisimportanttothesepeoplebecause:

•Helpsdetermineviabilityoftheventureinadesignated

market.

•Providesguidancetotheentrepreneurinorganizinghisor

herplanningactivities.

•Servesasanimportanttoolinhelpingtoobtainfinancing.

ValueoftheBusinessPlan(1of2)

• The thinking process required to complete the

plan is a valuable experience for the entrepreneur.

•Providesaself‐assessmentbytheentrepreneur.

•Forcestheentrepreneurtobringobjectivitytotheidea.

•Helpsconsiderobstaclesthatmightpreventtheventurefrom

succeeding.

•Planwaystoavoidsuchobstacles.

ValueoftheBusinessPlan(2of2)

•Beforecreatingabusinessplan,entrepreneur

mustundertakeafeasibilitystudy.

•Informationforafeasibilitystudyshouldfocuson:

•Marketing.

•Production.

•Finance.

InformationNeeds

•UASmallBusinessandTechnology

DevelopmentCenter

•sbtdc.uark.eduor479‐575‐5148

•AgPlan

•https://www.agplan.umn.edu/

BusinessPlanresources

PLAN. PRODUCE. PROFIT. WORKSHOPS

For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

PLAN. PRODUCE. PROFIT. WORKSHOPS

Marketing

Dr. Daniel V. Rainey

Agricultural Economics and Agribusiness

University of Arkansas

Whatismarketresearch?

•Marketresearchisthesystematicprocess

entrepreneursusetogaininsightintomarket

problemsandopportunities.

•Thetermmarket includesnotonlycustomers,butall

playerswhoareresponsibleforbringingcertain

productsandservicestomarketincludingsuppliers,

competitors,producers,wholesaledistributors,

retailers,logistics,andsoon.

MarketingMix(4Ps)

•MarketingMix:describeselementsneededtodeliver

productorservicetotheconsumer

•Product

•Place

•Price

•Promotion

Product

•Haveyouidentifiedaneedcustomerscannot

currentlyadequatelysatisfy?

•Howwillyourproductmeettheseneeds?

•Areyouincludingattributesthatthecustomerwon't

actuallyuse?(addingcost)

•Howandwherewillthecustomeruseyourproduct?

•Howisitbranded?

•Howisitdifferentiatedversusyourcompetitors?

•Whatisthemostitcancosttoprovide,andstillbe

soldsufficientlyprofitably?(SeealsoPrice,below).

Place

•Wherearepotentialcustomerscurrentlybuying

similarproducts?

•Wouldtheyprefertopurchasetheproductfrom

someotheroutlet:ifcurrentpurchasesareata

supermarketwouldtheybewillingtocometoa

Farmer’sMarket?

•IsCommunitySupportedAgriculture(CSA)an

option?

•Howcanyouaccesstherightdistributionchannels?

•Whatdoyourcompetitorsdo,andhowcanyoulearn

fromthatand/ordifferentiate?

Price

•Doesyourproductprovideadditionalvaluenotoffered

byexistingproducts?

•Whataretherelevantpricepointsforyourproductsin

thisarea?

•Isthecustomerpricesensitive?Willasmalldecreasein

pricegainyouextramarketshare?Orwillasmall

increasebeindiscernible,andsogainyouextraprofit

margin?

•Whatdiscountsshouldbeofferedtotradecustomers,or

tootherspecificsegmentsofyourmarket?

•Howwillyourpricecomparewithyourcompetitors?

•Whatwillitcostyoutoproduceyourproduct?

Promotion

•Whenandhowwillyouinformpotentialcustomersof

yourproduct?

•Willyoureachyouraudiencebyadvertisinginthepress,

oronTV,orradio,oronbillboards?Byusingdirect

marketingmailshot?

•ThroughPR?OntheInternet?

•Whenisthebesttimetopromote?Isthereseasonalityin

themarket?Arethereanywiderenvironmentalissues

thatsuggestordictate

•thetimingofyourmarketlaunch,orthetimingof

subsequentpromotions?

•Howdoyourcompetitorsdotheirpromotions?Andhow

doesthatinfluenceyourchoiceofpromotionalactivity?

MarketSegmentation

•Notallconsumerswillbeinterestedinyourproduct,

soyoumustidentifyindividualsthataremostlikelyto

buytheproductanddeterminetheirhabits.

•TheMarketSegmentshouldbe:

•Measureable

•Haveidentifiedcommunicationanddistributionchannels

•Responddifferentlytothemarketingmix

•Stablepopulationbase(notchangingquickly/afad)

•Largeenoughforyoutogenerateaprofit

•Geographic

•Demographic

•Pyschographic

•Behavioral

Primarybasisforsegmentation

•Basedonregionalvariationssuchas:

•Region(international,national,state,county,city,..)

•Climate

•Populationdynamics:urban,rural,suburban

•Populationgrowthrates

GeographicSegmentation

•Basedondemographicvariationssuchas:

•Age

•Gender

•Ethnicity

•Occupation

•Income

•Family‐status

DemographicSegmentation

•Basedonpsychographicvariationssuchas:

•Values

•Attitudes

•Lifestyles

PsychographicSegmentation

•BasedonBehavioralvariationssuchas:

•Usagerate

•Pricesensitivity

•Brandloyalty

BehavioralSegmentation

•Identifythesegment/marketwiththemost

potentialforyourproduct’ssuccess

•Developamarketmixtoconnectwiththattarget

segment

•Addadditionalsegmentsasyourproductgains

acceptance

Segmentation

•UASmallBusinessandTechnologyDevelopment

Center

•Mintel–whatistrendingonlineandin

publications

•Nielsen–consumerspendingandmedia

consumption

MarketResearchresources

PLAN. PRODUCE. PROFIT. WORKSHOPS

For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

Food Distribution

Channel Overview

J.A. Beaman and A.J. Johnson

EM 8921 • December 2006 • $2.50

A Guide for New Manufacturers

Contents

Food distribution channel players ................................................1

The product distribution pathway ................................................2

Typical distribution process for a retail food product ................3

Overarching imperative: Remember the customer .....................4

Pricing and the distribution channel ............................................4

Getting distribution ........................................................................5

Other distribution issues ................................................................6

Summary .........................................................................................8

References .......................................................................................9

Appendix A. Pricing, markups, and margins ............................10

Appendix B. Pricing worksheet...................................................12

Jill A. Beaman, faculty research assistant, and Aaron J. Johnson, food business

strategy specialist; both of the Food Innovation Center, Oregon State University.

Food Distribution Channel Overview • 1

The food distribution system in the U.S. is complex.

Many players—including middlemen—produce, manu-

facture, transport, distribute, market, and sell every type

of food product imaginable. By the time a product is

placed on a grocery store shelf, it has traveled countless

miles and has been handled by many people. Each per-

son has evaluated and scrutinized the product to assess

its risk and opportunity. Each has considered quality,

price, packaging, labeling, and marketing plans. By the

time the product is purchased, the manufacturer, bro-

ker, distributor, and retailer have all determined it to be

viable and protable, and the end consumer has deemed

it to be of signicant value.

Not every new product reaches the nal consumer.

Many great products never leave the manufacturer’s

warehouse. Creating the product is only half the battle;

the next step is to distribute and market it. While some

manufacturers can market their products directly to

consumers (e.g., through farmers’ markets, online sales, or DSD1), most

food manufacturers need to use middlemen (Henehan).

This publication explains the main issues that challenge new food busi-

nesses as they distribute their products to retail customers.

Food distribution channel players

The food system encompasses many activities, from harvest to pro-

cessing, retailing, and consuming. This system is called by many names:

marketing channel, distribution channel/chain, or supply chain. In this

publication, we use the term distribution channel. The main middlemen in

the distribution channel are as follows.

Food distributors purchase products from a manufacturer or from

another distributor and sell and distribute the products to retailers, food-

service companies, and other distributors.

1Direct Store Delivery: Manufacturers deliver products directly to the retailer.

Food Distribution Channel Overview

2 • Food Distribution Channel Overview

Food brokers act as food manufacturers’ representatives and facilitate

sales between manufacturers and retailers. They do not take ownership or

physical possession of products.

Food wholesale distributors are very similar to distributors, but they

do not perform as many services, such as stocking and managing retail

shelves.

Foodservice distributors and brokers are similar to retail brokers and

distributors, except that they focus on servicing foodservice customers.

Self-distributing retailers are large retailers, such as Albertsons, Fred

Meyer, Safeway, and Wal-Mart, who have their own distribution centers.

Manufacturers deliver directly to these centers. The retailer then dis-

tributes the product to individual retail stores. This system accounts for

roughly 34 percent of distribution centers in the U.S. (Harris, et al.).

The product distribution pathway

A new food product can take one of several paths to reach the consumer.

Distribution options depend on the product, the market, the type of retail

establishment, and the manufacturer’s sales skills. Some manufactur-

ers reach the consumer directly by selling products at farmers’ markets.

Others use elaborate distribution methods involving several brokers and

distributors. Many manufacturers do not have the skills or the time to pro-

mote and sell their new product. For them, the use of food distributors and

brokers is the only way to obtain distribution.

Most foods go through a distribution channel to reach the end consumer,

whether that consumer is a shopper in a retail grocery store or a diner at

a ne restaurant. The conventional distribution path for a packaged food

product is from manufacturer to broker to distributor to retailer. This path

can vary greatly depending on the product, the target markets, and the

manufacturer. In general, more perishable foods,

such as fresh seafood, have fewer handling

exchanges from the producer to the consumer,

than, say, a packaged product such as jams and

jellies.

Many requirements, such as UPC codes,

nutritional labeling, and product packaging, must

be satised before distributing a product. One of

the rst activities is to determine your product’s

target market. This includes identifying the geo-

graphic area, retail markets, and consumers that

will make up your core market.

Food Distribution Channel Overview • 3

Typical distribution process

for a retail food product

Step 1. Test the waters

Many new food manufacturers introduce their product at

small, local retail markets. This is a great way to test the waters.

Many small retailers like to help new local businesses. These

retailers are also a valuable resource for advice on pricing, pack-

aging, and promotions. Starting locally gives you an opportunity

to tweak your product, packaging, and promotions.

Step 2. Hire a broker

While some new food manufacturers have the skills to sell

successfully, most do not. A broker can help you with this job.

Securing a broker takes time, money, and effort. Aside from

initial sales to small retailers, brokers are the rst “sale” a manu-

facturer must make. You must convince the broker that your product is

viable and protable. For a broker, the costs and energy required to launch

a new product are great. On average, brokers will take a 3 to 5 percent

commission. For more information on brokers, see Using Food Brokers in

the Northwest: A Guide for New Manufacturers (EM 8922).

Step 3. Find a distributor

Distributors purchase, inventory, transport, and sell products to retail

accounts that the manufacturer has set up. They also assist in gaining new

retail accounts. Distributors act as logistics experts for food distribution.

Markups can range from 10 to 35 percent of the wholesale price, depend-

ing on the product, category, distributor, and retail customer.

Finding the right distributor is key. Many distributors sell to specic

types of retailers. If you are targeting a specic type of retailer, it is wise to

choose a primary distributor for that retailer. If you’re using a broker, the

broker often will help gain the attention of appropriate distributors.

Selling to a distributor can be a huge accomplishment. Having a

detailed and well-thought-out plan for your product will help you secure

a distributor. Many requirements must be met before a distributor will

consider your product. Make sure you understand them and do your home-

work ahead of time. For more information on distributors, see Using Food

Distributors in the Northwest: A Guide for New Manufacturers.

4 • Food Distribution Channel Overview

Step 4. Secure retail accounts

Even with a broker and/or a distributor

secured, your selling role isn’t over. You must

now work alongside your broker to make the

crucial sales to retailers. Remember, if the retailer

doesn’t buy your product, the distributor won’t

either!

Choosing the right retail accounts is crucial.

All retailers are different and have different

requirements. It is important to know the retail-

ers. Do research and know who’s competing in

your product category.

New food businesses usually nd it best to start small for nancial and

logistical reasons. Oregon is a great place to start a food business. Many

retailers, mainly small independent stores and chains, support local food

manufacturers. For more information on retailers, see Grocery Retailers in

the Northwest: A Guide for New Manufacturers (EM 8924).

Overarching imperative:

Remember the customer

Throughout this process, you have been convincing many people

that your product is viable, marketable, and protable. In the end, the

consumer will have the nal say. If the end consumer doesn’t buy your

product, no one along the distribution channel will buy it. Remember

consumers, and target your promotions and other marketing efforts to win

them.

Pricing and the distribution channel

Pricing your product correctly is crucial to its success. The price should

reect the product’s perceived value to the consumer. Consumers won’t

purchase a more expensive product unless its perceived value is greater.

Consider the competition’s price on the retail shelf. Visit stores and view

the competition; note prices and how package size relates to price.

Many new manufacturers are unsure of how to calculate margins and

markups, or they might not understand the difference between the two

(Taylor). Manufacturers must understand how the retail food dollar is

broken up. Every handler, from the manufacturer to the retailer, takes

a percentage. Appendix A gives examples of the retail food dollar and

Food Distribution Channel Overview • 5

explains how margin and markup are calculated. Use Appendix B to help

you estimate your selling price with a given markup or margin.

When calculating prots, consider all your costs, not just the costs to

produce the product. Additional costs include promotions, transportation,

and slotting fees. A slotting fee is a fee that retailers charge manufacturers

to cover the costs of putting a product in their warehouse and on their

shelf. These fees also cover the risk assumed by the retailer when taking

on new products (Hall).

Slotting fees vary depending on the product, region, and amount of

required shelf space (Marion). Slotting fees usually consist of payments

to the retailer, but they also can include discounts and free merchandise.

These fees range from $100 to several thousands of dollars. They can

be a at rate across a chain or vary by store. Since larger manufacturers

have larger promotion budgets, they are more able to afford slotting fees;

smaller manufacturers often have a hard time paying these fees. Slotting

fees can be negotiable if there is a demand for the product and it has local

recognition (Brooks).

Getting distribution

Whether approaching a broker, distributor, or retailer, be prepared.

When marketing a product, you’ll need to address the following: product

viability, knowledge of the market, marketing budget and plan, and nding

a broker or distributor that ts your objectives (Thilmany and Grannis).

Jim Brooks, business and marketing specialist at Oklahoma State Univer-

sity’s Food and Agricultural Products Research and Technology Center,

encourages manufacturers to use direct store delivery initially in order to

build relationships with individual stores, their employees, and their cus-

tomers (Brooks).

Distributors, retailers, and brokers are

running a business. They are looking for

protable products—ones that will sell eas-

ily, in sufcient volumes, and will provide

the margins needed to cover xed costs and

generate a prot. Retailers carry thousands

of items that compete for limited shelf space.

Distributors, who deal with inventory and

space issues, generally look for products that

will sell better than the ones they are cur-

rently carrying and have the potential to bring

in more money. Brokers invest a lot of money

and manpower to promote new products, so

6 • Food Distribution Channel Overview

they want products that can cover these costs. In the end, you

must sell each player on the benets of your product. You’ll also

need to show brokers and distributors that you are serious about

their business and are interested in building long-term relation-

ships.

To prove a product is viable, you rst must establish con-

sumer demand for your product—actual sales data or market

research that shows consumer acceptance. The product must be

attractive to the end consumer before a broker, distributor, or

retailer will accept it.

“In short, there are three ways to be attractive to the con-

sumer: be cheaper, be better, or be unique” (Thilmany and

Grannis). It is always easier to attract consumers to lower priced

products. When a product is higher in quality or unique, the

manufacturer might need to rely on consumer education and promotions to

attract consumers.

Other distribution issues

Technology2

New technologies and management systems are adopted every year in

the food retailing and distribution industries. The goal is to create a more

efcient, cost-effective, and responsive distribution channel. Management

systems play a huge role in maintaining product integrity and distribu-

tion efciency. Manufacturers need to be aware of these new technologies

and management strategies. If your product or business isn’t ready for the

technology (e.g., correct packaging, labeling, software compatibility), it

could be left behind.

The following are a few technologies that have been adopted or are

being developed for use in the food distribution industry.

Electronic data interchange (EDI) is a substitute for paper invoicing,

instead using electronic resources such as e-mail and the Internet.

Continuous replenishment uses shared computer networks between

retailers and suppliers to view inventory at any time. Sometimes called

“just-in-time” inventory or supply management.

Electronic consumer response (ECR) is a demand-driven replenish-

ment system designed to link all parties in the distribution channel to cre-

ate a massive ow-through distribution network. Replenishment is based

2Dimitri, C. and N. Richman. Organic Food Markets in Transition. Policy Studies

Report No.14. Henry A. Wallace Center for Agricultural and Environmental Policy,

Greenbelt, MD (2000).

Food Distribution Channel Overview • 7

on consumer demand and point-of-sale information. Overall, ECR trans-

lates to lower transaction costs for retailers.

Radio frequency identication (RFID), an automated radio signal

identication, is used by food distributors and retailers for inventory

purposes. RFID allows identication of merchandise while materials are

being handled and in transit. Using RFID technology, along with ECR,

helps retailers and distributors reduce costs and increase efciency.

Product movement

Most food is distributed via trucks, owned either by the manufacturer,

distributor, or a third-party transport company. Large retailers, such as

Albertsons and Fred Meyer, have centrally located distribution centers. It

usually is up to the manufacturer to have products delivered to the dis-

tribution center. From there, the retailer transports products to individual

stores.

Efciency is key in moving products through the food distribution chan-

nel, not only for cost reasons, but also for perishability and damage control

reasons. Produce and other perishable food products must be moved to the

end consumer as quickly as possible, and preferably with minimal han-

dling. The more times a product is handled, the greater the chance that it

will be damaged. Maintaining the product’s quality throughout the distri-

bution channel is a goal and challenge for producers (Fong, et al.).

Traceability

Due to recent food scares, such as mad cow disease, avian u virus,

E. coli outbreaks, and salmonella infections, consumers, as well as gov-

ernment agencies, are being more careful in regard to food

handling. Traceability systems are used not only for food safety,

but also to address issues such as bioterrorism and consum-

ers’ rights to know. Policy makers are studying the possibility

of making traceability systems mandatory (Golan, et al.). Stay

informed about current food safety concerns, especially those

that might impact your production or sales.

Packaging

Packaging is a major consideration. Because many retailers

use uniform shelving and layouts in all their stores, they can

accept only products with conforming package shapes. Visit

retailers and look at the competition’s packaging. Whether it be

a box, bottle, or jar, the size and shape needs to t the retailer’s

shelf. A bottle that is too tall may not t on the shelf, while

8 • Food Distribution Channel Overview

one that is too short or narrow will create unde-

sirable “empty space” (Koppen).

Jim Brooks, at Oklahoma State University’s

Food and Agricultural Products Research and

Technology Center, warns manufacturers not

to cut corners on packaging and presentation.

While it is important to not spend too much on

packaging, a good package is very important in

making sales.

The U.S. Food and Drug Administration

(FDA) requires most food products to include

a nutritional label. There are exceptions for

small businesses. The FDA exemption states,

“Businesses with fewer than 100 full-time

equivalent employees may claim an exemption

for food products that have U.S. sales of fewer

than 100,000 units annually. Companies claiming this exemption must

notify FDA that they meet the criteria before they begin marketing their

products” (FDA website). Even if you qualify for the exemption, however,

consider the appearance of your product. Today’s label-savvy consumers

might see the lack of nutrition labeling as an indication that a product isn’t

as good as others. At the very least, it is advisable to have a nutritional

label on hand to respond to customer requests.

Summary

It is not easy to distribute and sell food products. A food product can

take many paths to reach the retail customer, and these paths often include

many hurdles. It takes a great deal of work, money, help, and luck to suc-

cessfully market food products to end consumers.

Understanding the work of brokers, distributors, and retailers will

greatly improve your chances of successfully distributing your product.

Also, knowing early on whether to do your own marketing and distribu-

tion or to use brokers and distributors will save you time and possibly

money. Doing your research and understanding pricing is critical. And,

never forget that, in the end, consumers determine which products will

succeed.

Food Distribution Channel Overview • 9

References

Anderson, Krista (interview). Deli manager, New Seasons Market

(July 13, 2006).

Brooks, Jim (e-mail correspondence). Oklahoma State University, Food

and Agricultural Products Research and Technology Center (August 4,

2006).

Dimitri, C. and N. Richman. Organic Food Markets in Transition. Policy

Studies Report No.14. Henry A. Wallace Center for Agricultural and

Environmental Policy, Greenbelt, MD (2000).

F & D Report. Customer and Market Insights: Portland–Vancouver,

OR–WA. Information Clearinghouse Incorporated, Great Neck, NY

(2005).

Fong, Q.S., S. Rice, and B. Paust. “Marketing Perishable Products: Logis-

tics, Distribution, and Cold Storage.” University of Alaska, Fairbanks

(unpublished, 2003).

Golan, E., B. Krissoff, F. Kuchler, L. Calvin, K. Nelson, and G. Price.

Traceability in the U.S. Food Supply: Economic Theory and Industry

Studies. USDA Economic Research Service (2004).

Hall, S.F. From Kitchen to Market: Selling Your Gourmet Food Specialty.

Dearborn Trade Publishing, Chicago, IL (2005).

Harris, J.M., et al. The U.S. Food Marketing System, 2002: Competition,

Coordination, and Technological Innovations into the 21st Century.

USDA Agricultural Economic Report 811 (August 2002).

Henehan, B.M. “Some Facts and Myths About ‘Eliminating the Middle-

man.’” Smart Marketing. Cornell University (January 2003).

Koppen, Gary (interview). Grocery manager, Food Front Cooperative

(June 26, 2006).

Marion, B.W. “Changing Power Relationships in U.S. Food Industry: Bro-

kerage Arrangements for Private Label Products.” Agribusiness 14(2):

85–93 (1998).

Taylor, Duran (interview). Natural foods manager, Market of Choice

(June 23, 2006).

Thilmany, D. and J. Grannis. Marketing Food Products: Direct Sales vs.

Distributors and Brokers. Agricultural Marketing Report AMR 98-04.

Colorado State University (1998).

U.S. Food and Drug Administration. Nutritional Labeling Exemptions.

www.fda.gov

10 • Food Distribution Channel Overview

Appendix A. Pricing, markups, and margins

Understanding markups and margins

Manufacturers are often confused about how to calculate markups and

margins (prot). Markup and margin are different. Markup is the amount

you add to your cost of goods sold (COGS) to arrive at a selling price.

Margin is the percentage you make on the sale expressed as a percent-

age of the selling price. It states how much prot you’ve made based on a

given selling price. For example, a 25 percent markup will yield a 20 per-

cent margin.

Markup calculations

To nd a product’s selling price with a desired markup, use the following

formula:

COGS x (1 + markup %) = selling price

Example 1: A product with a COGS of $10.00 and a markup of 25%:

COGS x (1 + markup %) = selling price

$10.00 x (1 + 0.25) = $10.00 x 1.25 = $12.50

Conversely, the formula for calculating markup with a given selling price

and COGS is:

(selling price ÷ COGS) – 1 = markup

($12.50 ÷ $10.00) – 1 = 1.25 – 1 = 0.25 or 25%

Margin calculations

To set a selling price with a given COGS and a desired prot margin, use

the following formula:

COGS ÷ (100% – margin %) = selling price

Example 2: If an item costs $10.00 and you want to add a 20% margin:

COGS ÷ (100% – margin %) = selling price

$10.00 ÷ (100% – 20%) = $10 ÷ 80% = $12.50

Conversely, the formula for calculating margin with a given selling price

and COGS is:

(selling price – cost) ÷ selling price = margin

($12.50 – $10.00) ÷ $12.50 = $2.50 ÷ $12.50 = 0.2 or 20%

Note that the selling price in Example 2 is the same as that in Exam-

ple 1, but the markup is 25 percent, while the margin is 20 percent. The

reason is that the markup is calculated based on the COGS, while the

margin is calculated based on the selling price.

Food Distribution Channel Overview • 11

Pricing—Work backwards!

Because your product must be priced

competitively, work backwards to calcu-

late your prot. If you or your distribution

channel partners aren’t making an adequate

prot, the product will not succeed.

Although every product is different,

a product’s price increases with every

exchange of hands. As the manufacturer,

you must account for every markup and

how this will affect the nal retail price of

your product. Thus, you need to know what

commission the broker will take and how

much the distributor and retailer will mark

up your product.

For example, let’s assume a manufacturer sells a product to a distribu-

tor, using a broker. The distributor sells to a retailer, with a nal retail

price of $0.99 to the consumer.

The manufacturer produces the product for $0.49 (COGS). With a

30 percent markup, the manufacturer sells the product to the distributor for

$0.64. Taking into account the 5 percent ($0.03) commission to the broker,

the manufacturer’s revenue is $0.61 per unit sold. The distributor pur-

chases the product for $0.64 and marks it up 15 percent to $0.74. Retailers

then purchase the product for $0.74, mark it up 35 percent, and sell it to

the consumer for $0.99.

This retail dollar is broken down as follows. (These numbers are based

on average markups; this example does not apply to every product.)

COGS $0 .49

Manufacturer’s 30% markup 0.15

Broker’s 5% commission = $0.03 (not added to price)

Distributor’s 15% markup 0.10

Retailer’s 35% markup 0.25

Retail price $ 0.99

12 • Food Distribution Channel Overview

Appendix B. Pricing worksheet

A. Markups: Finding the selling price

COGS

x (1 + markup %) = selling price

1. 15.00 x (1 + 0.30) = $19.50

2. _____________________ x _____________________ = _________________________

3. _____________________ x _____________________ = _________________________

B. Markups: Working backwards from the selling price

( selling price ÷ COGS ) – 1 = markup

4. ( $19.95 ÷ $13.50 ) – 1 = 0.478 or 47.8%

5. (____________________÷____________________) – 1 = _________________________

6. (____________________÷____________________) – 1 = _________________________

C. Margins: Finding the selling price

COGS ÷ (100% – margin %) = selling price

7. $20.00 ÷ (100% – 20 %) = $25.00

8. ____________________ ÷ (100% – ______________%) = _________________________

9. ____________________ ÷ (100% – ______________%) = _________________________

D. Margins: Working backwards to ﬁnd the margin

(selling price – cost) ÷ selling price = margin

10. ( $25.00 – $20.00 ) ÷ $25.00 = 0.2 or 20%

11. (_______________ – ______________) ÷ __________________ = _________________

12. (_______________ – ______________) ÷ __________________ = _________________

For more information

Grocery Retailers in the Northwest, EM 8924

Using Food Brokers in the Northwest, EM 8922

Using Food Distributors in the Northwest, EM 8923

These publications may be viewed or downloaded from the Web. Visit the online OSU

Extension Service Publications and Multimedia catalog at extension.oregonstate.edu/

catalog/

Hard copies also are available from OSU Extension and Experiment Station Communica-

tions. For prices and ordering information, visit our online catalog or contact us by fax

(541-737-0817), e-mail (puborders@oregonstate.edu), or phone (541-737-2513).

Visit the Food Innovation Center website at c.oregonstate.edu/

This publication was produced and distributed in furtherance of the Acts of Congress of May 8 and June 30, 1914. Extension work is a coopera-

tive program of Oregon State University, the U.S. Department of Agriculture, and Oregon counties.

Oregon State University Extension Service offers educational programs, activities, and materials without discrimination based on age, color,

disability, gender identity or expression, marital status, national origin, race, religion, sex, sexual orientation, or veteran’s status. Oregon State

University Extension Service is an Equal Opportunity Employer.

Trade-name products and services and companies are mentioned as illustrations only. This does not mean that the Oregon State University Exten-

sion Service either endorses these products, services, and companies or intends to discriminate against products, services, and companies not

mentioned.

Published December 2006.

U of A SBTDC

University of Arkansas Small Business and

Technology Development Center University of Arkansas

Sam M. Walton College

of Business Don W. Reynolds Center For

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•Personal start-up assistance and workshops

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•Market Research regarding demographics, psychographics, traffic counts,

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for grants, government funding opportunities, etc.) on staff in Little Rock

available

ALSO:

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Washington County

Businesses You May Know!

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PLAN. PRODUCE. PROFIT. WORKSHOPS

Food Safety and Preservation

Pamela Brady

Department of Food Science

FOOD PROCESSING

The transformation of raw ingredients, by

physical or chemical means into food, or of food

into other forms. Food processing combines raw

food ingredients to produce marketable food

products that can be easily prepared and served

by the consumer.

FOOD PRESERVATION

To prevent or delay enzymatic and/or microbial

changes in food so that the food is available at

some future time.

PREVENTING ENZYMATIC ACTION

• Readily destroyed by heat

• Freezing slows enzyme activity but does not

stop

• Heat treat before freezing (blanching)

PREVENTING MICROBIAL ACTION

Four types of microorganisms can contaminate

food and cause foodborne illness:

Viruses Parasites FungiBacteria

Microorganisms – small, living organisms

MICROORGANISMS

•Pathogens – microorganisms that cause illness

(disease)

•Spoilage Organisms - microorganism that

causes spoilage

NOT ALL MICROORGANISMS ARE BAD!

• Some used to produce foods – bread, cheese,

wine, beer, sauerkraut, pickles

• Some used to produce useful industrial

products – enzymes, antibiotics

• Some break down organic wastes and return

them to the soil – basis of composting wastes

FOODBORNE DISEASES

• Illnesses acquired by eating food containing

microorganisms or the toxins (poisons) they

produce

WHAT BACTERIA NEED

F‐Food

A‐ Acidity

T–Temperature

T‐ Time

O‐ Oxygen

M‐Moisture

F‐Food

A–Acidity

T–Temperature

T‐ Time

O‐ Oxygen

M‐Moisture

Disease-causing

organisms grow well in

food that is slightly acidic

or nearly neutral (pH of

4.6 to 7.5)

F‐Food

A‐ Acidity

T–Temperature

T‐ Time

O‐ Oxygen

M‐Moisture

All microorganisms have a

defined temperature range

over which they grow.

• At high temperatures most

bacteria are killed.

• At low temperatures growth

is usually slowed or stopped.

F‐Food

A‐ Acidity

T–Temperature

T‐ Time

O‐ Oxygen

M‐Moisture

Some pathogens require oxygen to grow,

while others grow when oxygen is absent

and can live with or without oxygen

F‐Food

A‐ Acidity

T–Temperature

T‐ Time

O‐ Oxygen

M‐Moisture

F‐Food

A‐ Acidity

T–Temperature

T‐ Time

O‐ Oxygen

M‐Moisture

Most bacteria grow well in moist food since

they need water in an available form to

grow

F‐Food

A‐ Acidity

T–Temperature

T‐ Time

O‐ Oxygen

M‐Moisture

Moisture availability is expressed using a

measurement called water activity (aw)

aw= 1 water aw=0 totally dry

Bacteria most often grow in food with

aw≥ 0.85

Most fresh foods have an awthat provides

the optimal moisture for bacteria to grow

(aw= 0.97 – 0.99)

F‐Food

A‐ Acidity

T–Temperature

T‐ Time

O‐ Oxygen

M‐Moisture

• The awof food can be manipulated by a

variety of means such as:

• Physically removing the water – i.e.

drying or baking

• Addition of ingredients such as sugar

or salt that bind water so it is

unavailable for use by microorganisms

SPOREFORMING BACTERIA

• Some bacteria form spores.

• Spores are a dormant stage in

the growth cycle of these

organisms.

• Spores can survive cooking

and freezing

• Once adverse conditions are

over, spores can become

active growing organisms

PRESERVATION METHODS - CANNING

• Food is sealed in a container and heated

• Container keeps out air

• Heat sufficiently to kill microorganisms and inactivate

enzymes

• But how much heat is needed?

• Depends on the nature of the food

PRESERVATION METHODS - CANNING

• Acid foods – acid helps control growth of

organisms so less heat is required – 212oF is

sufficient

PRESERVATION METHODS - CANNING

• Water-bath can

• Fruits,

• Pickles

• Jams, jellies and other types of preserves

PRESERVATION METHODS - CANNING

• Low-acid foods –

• Not enough acid present to help control

microorganisms so need more severe heat

treatment, i.e. >212oF

• Get by processing under pressure

PRESERVATION METHODS - CANNING

• Pressure can

• Vegetables

• Meats

PRESERVATION METHODS - FREEZING

• Lower temperature to a point too low for

microorganisms to grow or enzymes to work

• Freezing also ties up water as ice making it

unavailable for microorganisms

PRESERVATION METHODS - FREEZING

• Freezing generally slows actions of

microorganisms and enzymes but does not

stop them completely

• They can resume once temperature is raised

PRESERVATION METHODS - FREEZING

• Blanching – mild heat treatment applied before

freezing

• Reduces oxygen in tissue

• Reduces number of

microorganisms on food

• Inactivates enzymes

PRESERVATION METHODS - FREEZING

• Factors influencing quality of frozen food:

• Rate of freezing

• Faster = better so smaller ice crystals

formed

• Packaging

• Moisture-vapor proof so water from food

not lost to dry air of freezer

PRESERVATION METHODS - DRYING

• Decreasing the water available for the growth

of microorganisms and the action of enzymes

Remember:

• Water availability in food can be manipulated by a variety of

means such as:

• Physically removing the water – i.e. drying

• Addition of ingredients such as sugar or salt that bind

water

PRESERVATION METHODS - DRYING

• Physically removing the water – i.e. drying

• Foods often blanched before drying to inactivate

enzymes

PRESERVATION METHODS - DRYING

• Addition of ingredients such as sugar or salt that

bind water

• Addition of sugar

• Jams, jellies, preserves

• Candied fruits

• Addition of salt

•Jerky

• Cured meats

PRESERVATION METHODS - PICKLING

• Preserving foods by lowering their acid levels

to a point that inhibits microbial growth

• pH of pickled foods usually <4.6

PRESERVATION METHODS - PICKLING

• Acid may be lowered by

• Addition of an acid, such as vinegar

• Frequently spices and herbs with

antimicrobial activity also added

• Mustard seed, cinnamon, cloves

PRESERVATION METHODS - PICKLING

• Acid may be lowered by

• Allowing controlled fermentation by

microorganisms

• Salt is often used to control organisms that

grow

• Dry salt – pulls water from product to make

a brine – ex. sauerkraut, kimchi

• Salt brine - pickles

PLAN. PRODUCE. PROFIT. WORKSHOPS

For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

PLAN. PRODUCE. PROFIT. WORKSHOPS

Food Processing Equipment

William McGlynn

Oklahoma State University

Outline

•CreatingaProcessFlowDiagram(PFD)

•SelectingProcessingEquipment

•FindingProcessingEquipment

•PurchasingProcessingEquipment

–New

–Used

ProcessFlowDiagram(PDF)

StartbymakingaPFD

APFDisaflowchartusedtoconceptualize,

analyzeanddesignprocesses.Usedasapartof

yourHACCPprogram,aPFDisasimplediagram

showingproductflowandCriticalControlPoints

(CCP’s).

PurposeofaPFD

1. Promotesclearthinking,planningand

examination.

2. Communicationaidbetweenprojectteam

members.

3. Documentation:example–identifiescritical

controlpoints(CCP’s).

PurposeofaPFD(cont.)

4. Canalsobeusedas:

–Basisforequipmentlist.

–Meanstotrackmassbalance(materialflow)and

utilitiesusage.

–BasisforPipingandInstrumentationDiagrams

(P&IDs).

–Aidincosttracking.

GoodPFDsare…

1. Easytounderstand–nounexplainedsymbols.

2. Subdivideintosimplecomponents.

3. Consistent.

4. Printedonnormal‐sizedpaper(fitsyour

copier.

GoodPFDsare…(cont.)

5. Simpletoimprove,changeandupdate.

6. Identifiedbyatitle,versionandorigination

date.

7. Maybeaccompaniedbyastreamsand

componentspreadsheet(optional).

PFDSymbols

Process Input/

Output

Decision Flowline

TypicalPFDsMayDescribe…

•Receiving

•Storing

•Preparation

•Cooking

•Holding

•Cooling

•Shipping

•Cleaning

•Sanitizing

•Packaging

MasterPFD

“Preparation”PFD “Process”PFD

Streams&Components

1. Streamsidentifythefloworconnection

betweenindividualprocessorinput/output

symbolsonaPFD.

2. Shownasa“bubble”onarrowsinthePFD.

3. MayidentifyandquantifyCCP’s.

4. Mayincludeutilities.

5. Couldbeusedtoshowlabor.

Streams&ComponentsWorksheet

Stream No.

Description

Berry Berry Temper Berries Fresh Washed Peeled Hot Waste Waste Water Waste Drain Peelings

Components

A B Apples Apples Apples Water Water

Operating flow boxes

213322 3 2

% of batch

33.3% 16.7% 50.0% 50.0% 33.3% 33.3% 21.7%

lb/batch

100 50 150 150 100 100 65 <100 <100 200 35

Design flow boxes

12 3 3

lb/batch

600 600 150 150 195 <150 <150 300 3

Labor hours per batch

0.20 0.20 0.75 0.30 0.30 0.30

per day

0.60 0.60 2.25 0.90 0.90 0.90

Temperature F

-10 -10 40 35 37 37 40 120 65-70

Pressure psig

Electric kW

Remarks

Froz en

ingr Frozen

ingr Temper

to 35+ F Hand

wash

Box,

liner and

strap Floor

drain

Box,

liner and

strap Floor

drain Apple

peels

1123456789

10 11 12 13 14

SelectingProcessingEquipment

Goalistoaddefficiencytoyourprocessandvalue

toyourproduct.

Examples:

•Mixer

•Cooker

•Grinder

•Slicer

•Pump

CIPskid

ProcessEquipmentList

Makealistofequipmentneeded.Hint:usea

spreadsheet.

Firsttry:BasedonthePFDs,writedownthe

equipmentneededtocompleteeachstepofthe

process.

Secondtry:Getsomehelpfromaperson

experiencedwithfoodprocessingand/or

literature.

GatherInformationaboutEquipment

•Capacityneeded.

•Environment.

•Utilitiesavailable.

BiomassGasificationSystem

SolidsWasteCollection

Capacity

Determinethecapacityofthe

equipmentneeded:

e.g.bottlesperminute,kg/hr

Note:oversizeequipmentto

coverdown‐timefrombreaks,

failures,andunexpected

problems.

CapacityDilemma

Equipmentsize(capacity)matters:

•Small(e.g.restaurant)–widelyavailablefora

reasonablecost.

CapacityDilemma

Equipmentsize(capacity)matters:

•Medium(e.g.averagestartupcompany)–not

commonlyavailable,butwhatisoftenneeded.

CapacityDilemma

Equipmentsize(capacity)matters:

•Large+(e.g.establishedfoodprocessor)–

available,butextremelyexpensive.

Environment

Whatwilltheequipmentbeexposedto?

•Hotwaterwash‐down.

•Highorlowtemperatures.

•Humidity.

•Corrosivechemicals.

•Frequentdisassembly.

•Movementfromplacetoplace.

Utilities

Whatservicesareavailableintheplantand

whatwillbeneededfortheequipment?

•Water(hotandcold)

•Naturalgas

•Steam

•Electricity

•Compressedair

•Waste(liquidandsolid)handling

FindingProcessingEquipment

Searchon‐lineresourceslike:

•Foodmaster.com

•Foodindustryresource.com

•Thomasnet.com

Metaldetector

PurchasingProcessingEquipment

PrepareaRequestforQuotation(RFQ)foreachitemof

equipmentneeded.Include:

•Statementofbasicpurposeofthemachine.

•Statementofneeds:capacity,environment&utilities.

•Options:askforpricesofextrassuchasinfeed

conveyor,computercontrol,changeparts.

•Deliverycharges:Cratingandfreighttoyourdock.

•Timeframe:Letthesupplierknowyourtime

constraintsondelivery.

PurchasingProcessingEquipment

•SendRFQ’stopotentialsuppliersthatyou

identifiedinyouron‐linesearch.

•Obtainfeedbackfromeachsupplierthatyour

RFQwasreceivedandisbeingprocessed.

EvaluateRFQ’s

•Don’tmakedecisionsbasedonpricealone.

•Useanobjectivenumericalratingsystem

whenpossible.

$$$

Payments: Mostcompanieswillrequireadown

paymentandatleast90%ofthetotalpriorto

shipment.

Grants: Fewgrantssupportequipment

purchases.

Loans: Somecompaniesfinancetheir

equipment.

Rentals: Somecompaniesrenttheirequipment

orhaverent‐to‐ownprograms.

Newvs.UsedEquipment

New

•Builttoorder(takestime)

•Expensive

•Longservicelife

•Nopriorproducthistorythis

textisinsertedtotakeup

spaceandevenoutrows.

•Uptodatesafeguardsand

operatorprotection

Used

•Instock

•Lowercost(about½)

•Servicelifeunknown

•Priorhistorywithproducts

thatmaybedangerousor

incompatible

•Safetyprotectioncouldbe

outdated,missingor

disabled.

FactSheets

FAPC‐102:SelectingandPurchasingFood

ProcessingEquipment,byTimBowser

http://pods.dasnr.okstate.edu/docushare/dswe

b/Get/Document‐979/FAPC‐102web.pdf

FAPC‐113:SelectingandPurchasingUsedFood

ProcessingEquipment,byTimBowser

http://pods.dasnr.okstate.edu/docushare/dswe

b/Get/Document‐987/FAPC‐113web.pdf

PLAN. PRODUCE. PROFIT. WORKSHOPS

For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

Arkansas Food Innovation Center

Current Processing Capabilities

Mike Davis

JF Meullenet

Department of Food Science

Institute of Food Science and Engineering

University of Arkansas

CURRENT AFIC PRODUCTS

Tomato Sauce

Salsa

Dehydrated

Mushrooms

Dehydrated Herbs

Dehydrated Apples

Strawberry Jam

Blackberry Jam

Apple Sauce

Apple Butter

Simple Syrups

Fermented Cabbage

Fermented Jalapeno

Slices

Kombucha

Pesto

Hummus

Salad Dressings

Baked Cookies

Baked Soy Nuts

Product Development Test

Kitchen

A fully equipped commercial

kitchen

Food Processing

An 8,000 square foot pilot plant

is a certified/inspected facility

that can be used for product

development and to process

product for market testing.

FACILITIES SIZE REDUCTION

The Hobart HP400 food

processor may be used to

reduce the size of

vegetables for salsa,

tomato sauce, habanero

jelly, and many others.

BLANCHING

In addition to

water submersion

blanching, steam

blanching

techniques are also

available.

FINISHER

A finisher is used

to rid product of

seeds and skins

and to aid in the

processing of

products such as

apple butter and

tomato sauce.

COOKING

Severalsizes

ofsteam

jacketed

stainlesssteel

kettlescanbe

usedfor

cooking.

All IN ONE COOKING

The Stephan Universal

machine can be used

for processes which

require size reduction,

and/or temperature

control, such as pesto,

hummus, blackberry

jam, and strawberry

jam.

DRYING

The Harvest

Saver dehydrator

is used for

dehydrating fruits,

vegetables, herbs

and mushrooms.

BAKING

The Duke

convection oven

is used to bake

products such as

cookies and is

also used for

roasting soy nuts.

PASTEURIZING

Several different

methods are

available for

pasteurization as

well as the

achievement of

a good hermetic

seal.

BEVERAGE PASTEURIZING

The juice

pasteurization

system can be

used for

beverage

products such

as apple cider.

PRODUCT FILLING

The piston filler is

used to fill

various types

and sizes of

containers and is

adjusted to

automatically

dispense the

desired volume

of product.

PACKAGE SEAMING

Dixie can seamers

are available for

the closure of

various types of

cans and plastic

containers with

metal lids.

PACKAGING SEALING

Jawsealing

andvacuum

chamber

sealing

equipmentare

available.

LABELING

The Advent 300

labeling

machine is used

to label

cylindrical

packaging

containers with a

diameter range

of 1.5”- 6”.

PERSONNEL

Arkansas Food Innovation Center Contact

Mike Davis, AFIC Manager

479.575.3095, afic@uark.edu

Affiliated Scientists

Steve Seideman, Food Processing Extension Specialist

479.575.4221, seideman@uark.edu

Renee Threlfall, Research Scientist, Fruit Processing

479.575.4677, rthrelf@uark.edu

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

The workshops are sponsored through a grant entitled “Fostering Enterprise

Diversification to Expand Local Community Food Systems” from the Southern Extension

Risk Management Education grant program.

PLAN. PRODUCE. PROFIT. WORKSHOPS

Food Additives and Ingredients

William McGlynn

Oklahoma State University

OutlineofPresentation

•DefinitionofFoodadditive

–Directversusindirect

–Statusoffoodadditives

–Additiveversusprocessingaid

•Usesoffoodadditivesandspecialtyingredients

–Enhancingfoodquality

•Colors

•Flavors

–Preservingquality– extendingshelflife

•Antioxidants

•Anti‐browningagents

•Gums/starches

•Emulsifiers

–Preservingfoodsafety/microbialstability

•Chemicalpreservatives

•Naturalpreservatives

•Examplesofmulti‐functionalingredients

–Spices

–Gums/starches

–Phosphates

•Special‐purposeadditives

–Nutritional/nutraceuticaladditives

–Sweeteners

–Enzymes

–Acidulants

–Flavorenhancers

Whatisafoodadditive?

•Foodadditives areaddedsubstancesthat

becomeacomponentoffoodorotherwise

affectthecharacteristicsoffood.

–Usuallyaddedforsomefunctionaleffect.

–Maybe“DirectFoodAdditives”or“IndirectFood

Additives.”

•Indirectfoodadditivesaretypically

componentsoffoodpackaging.

•Federalregulationscontaina

comprehensivelistofall

allowedfoodadditives.

Statusoffoodadditives

•Generallyrecognizedassafe(GRAS).

–Usuallynotsubjecttoheavyrestrictionsonuse.

–May havemaximumallowedusagelevels.

•Allothers

–Usuallyhaveveryspecifically

definedusesandmaximum

allowedusagelevels.

Foodadditiveversusprocessingaid

•Foodadditivesmustalwaysbedeclaredonthelabelas

partoftheingredientsstatement.

–Functionoffoodadditivemayalsoneedtobedeclared.

•Colors

•Preservatives

•Processingaidssubstancesthat

haveafunctionaleffectduringprocessing

buteithernotpresentorpresentintrace

amountsinthefinalproductandhaveno

functionaleffectinthatfinalproduct.

–E.g.flowingagents,releaseagents,certain

enzymes.

–Donotneedtobedeclaredinthe

ingredientsstatement.

Foodadditivestoenhancefoodquality

•Colors.

–Twocategories:

•Certified.

–E.g.FD&CYellow#5,Blue#1,Red#40.

–Mustbedeclarediningredientsstatementusingspecificname.

•Exempt.

–E.g.annatto,paprika,beetpowder,caramelcolor.

–Maybedeclaredbynameiningredientsstatement

oridentifiedgenericallyas“artificialcolor.”

•Note:useofsome

colorsisrestricted

forsomefoods.

Foodadditivestoenhancefoodquality

•Flavors

–Twocategories:

•Natural

–Derivedfromaspice,fruitorfruitjuice,vegetableorvegetable

juice,edibleyeast,herb,bark,bud,root,leaforsimilarplant

material,meat,fish,poultry,eggs,dairyproducts,or

fermentationproductsthereof.

–Maybedeclaredbynameontheingredientstatementorlisted

genericallyas“naturalflavor.”

•Artificial

–Syntheticflavorsnotderivedfromnaturalsources.

–Generallylistedas“artificialflavor”intheingredientstatement.

•Generallynorestrictionsonuse,butartifically‐

flavoredproductsusuallymustbeidentifiedas

suchontheproductlabel.

Foodadditivesforpreserving

quality/extendingshelflife

•Antioxidants

–Preventorslowcolorloss(browning),

off‐flavors,off‐aromas

–Twocategories:

•Synthetic

–E.g.BHA,BHT,TBHQ,Propyl‐gallate.

–Usagelimitsaregenerallyspecified.

•Natural

–E.g.tocopherols,ascorbicacidandrelatedcompounds,

sulfites,rosemaryextract,otherextracts.

–Apartfromsulfites,usuallydonothaveabsoluteusagelimits.

Foodadditivesforpreserving

quality/extendingshelflife

•Anti‐browningagents

–Chelators (bindupmetalions)

•EDTA

•CitricAcid

–Oxygenscavengers

•Ascorbicacid

•Erythorbic acid

•Sulfites

–Somehaveusagelimits,e.g.EDTAandsulfites,some

donot.

•Oftenusedincombination,e.g.citricacidand

ascorbicacid(“FruitFresh”).

Foodadditivesforpreserving

quality/extendingshelflife

•Gums/Starches

–Usedas:

•Thickeners.

•Tobindwater.

•Toaddfreeze/thawstability.

•Topreventseparationandsyneresis (“weeping”).

•Many differenttypesandblendsoptimizedfor

differentuses.

–Supplierscanrecommendparticular

typesandusagelevelsforspecific

applications.

Foodadditivesforpreserving

quality/extendingshelflife

•Emulsifiers

–Usedtokeepoil/watermixes

(emulsions)stable.

–Twocategories:

•Synthetic

–E.g.“Tweens”,“Spans”,“Polysorbates.”

–Typicallyhavespecificusagelimits.

•Natual

–E.g.lecithin,mono‐anddi‐glycerides.

–Usuallynospecificusagelimits.

–Oftenusedincombinationwithgums/starches.

Foodadditivesforpreservingfood

safety/microbialstability

•Chemicalpreservatives:

–Sodiumbenzoate(moreeffective

againstbacteria).

–Potassiumsorbate (moreeffective

againstmolds).

–Propionicacid(usedmostlytocontrolmoldinbaked

goods).

–Nitrates/nitrites(usedtocuremeat).

–Derivativesoforganicacids(usedaswashesforfresh

produce,animalcarcasses,etc.).

•Typicallyhaveverytightlyregulatedusagelevels.

Foodadditivesforpreservingfood

safety/microbialstability

•“Natural”preservatives.

–Aceticacid(vinegar).

–Lacticacid(productofnaturalfermentation).

–Manyspices,e.g.mustard,cinnamon.

–Smoke.

–Sugar.

–Salt.

Examplesofmulti‐functionadditives

•Spices.

–Oftenusedtoaddflavor,color,andactas

preservatives.

•Gums/starches.

–Oftenusedtothickenandto

stabilizetextureduringcooking,

duringfreeze/thaw,andover

shelf‐life.

•Phosphates.

–Oftenusedinmeatproductsto

retainmoistureandtostabilize

emulsions.

Specialpurposeadditives

•Nutritionaladditives.

•Vitamins.

•Minerals.

•Fiber.

•Usedtoenhancethenutritionalvalueoffoods.

•Note:generallynotallowedto“enhance”commonfoods

beyondnaturallevelsofnutrients.

–Nutraceuticaladditives

•Anyaddedingredientnotcommonlyconsideredafoodand

intendedtoaffectthestructureorfunctionofthebody.

–E.g.manyherbalremediesandbotanicalproducts.

•Note:mostofthesenutraceuticals arenot approvedfood

additivesandusingthemwillmoveaproductfrom“food”to

“dietarysupplement.”

Specialpurposeadditives

•NaturalSweeteners/thickeners/humectants.

–Naturalsugars.

•E.g.sucrose(sugar),glucose,fructose,high‐fructosecornsyrup,

cornsyrupsolids.

•Sweetnessvaries.

•Generallynorestrictionsonuse.

–Maltodextrins.

•Usuallyderivedfromcornstarch.

•Mayaddsomesweetness,alsousedtoadd

mouthfeelor“body”,especiallytobeverages.

•Generallynorestrictionsonuse.

–Sugar‐alcohols.

•E.g.sorbitol,xylitol,mannitol.

•Notassweetastablesugar,butdonotcontributetotoothdecay

orraisebloodsugarlevelsasmuchasnaturalsugars.

•Mayhaveusagelimits,oftenusedincombinationwithother

sweeteners.

Specialpurposeadditives

–Non‐nutritiveorartificialsweeteners.

•Saccharine.

•Aspartame(Nutrasweet®).

•Acesulfame potassium(Ace‐K).

•Sucralose(Splenda®).

•Rebaudioside A(Truvia®– derived

fromtheSteviaplant).

•Neotame (Newtame®).

•Advantame.

–Note:artifical sweetenersoftenhaveusagelimits

andsomearemoresuitablethanothersfor

certainproducts,e.g.bakedgoodsorbeverages.

Specialpurposeadditives

•Enzymes

–Maybeprocessingaids,e.g.proteasesusedin

cheese‐making,pectinasesusedinjuice

production,amylasesandinvertases usedin

makinghigh‐fructosecornsyrup.

–Maybefoodadditivese.g.proteasesusedin

marinadesandmeattenderizers,

amylasesaddedtobreadflour,

lactaseinlactose‐freedairy

products.

Specialpurposeadditives

•Acidulants

–UsedtoreducethepHoffoods,

e.g.“pickled”products.

–Commonacidulants include:

•Aceticacid(vinegar).

•Citricacid.

•Lacticacid.

•Gluconic acid(Glucono‐delta‐lactone,GDL).

–Notas“tangy”asotherorganicacids.

Specialpurposeadditives

•FlavorEnhancers – additivesthatdonothavea

flavoroftheirownbutservetointensifyflavors

presentintheproduct.

•Purifiedforms(oftenusedincombination):

–Monosodiumglutamate(MSG).

–Disodiumguanylate(GMP).

–Disodiuminosinate (IMP).

•Yeastextractsandautolysates.

•Usedtoenhance“savory”flavors,oftenusedin

soups,meatproducts,chips,crackers,etc.

Summary

•Manydifferenttypesof

additivesexistwithmany

differentfunctionsinfoods.

•Ingredientsupplierswilloftenhave

technicaluseguidelinesfordifferenttypesofproducts.

•“Additives”assuchmakepossiblemanyofthefoods

wetakeforgrantedthesedaysbypreservingquality

andsafetyandextendingshelf‐life.

•Dependingonthetypeofadditivebeingused,there

maybeveryspecificregulationsdefiningthekindsof

foodsitcanbeusedinandhowmuchcanbeaddedto

thosefoods.

Resources

•CodeofFederalRegulations

(http://www.ecfr.gov/)

–Relevantregulations:21CFRParts170‐190.

•FoodMaster(http://www.foodmaster.com/)

•Google

(http://www.google.com)

PLAN. PRODUCE. PROFIT. WORKSHOPS

For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

PLAN. PRODUCE. PROFIT. WORKSHOPS

Food Packaging

Steve Seideman

Extension Food Processing Specialist

Packaging

•Lookatfoodcategorieslist.Atretail,people

expecttofindsimilarthingsgrouped

together.

•Storearrangedbycategorywhichhastodo

withpreservation.Forexample–potato

chipsinmeatsection?

•SO–youmaybecompelledtopackageby

foodcategorystyle.

•FoodService– bulkpackaging

YourOptions

•Jars

•Cans

•Pouchesandvacuumpackages

•Plasticcups,trays

•Bottles

•Clamshells

•Plasticbags

•OverwrapPVCfilmontray

ProductsPackagedatAFIC

FunctionsofFoodPackaging

•Majorroleispreservation.

•Foodpackagingshouldhavefeatureswhichmake

theproducteasiertouseandadd

convenience.(ziplock,recloseable,lidonjar,screw‐

topcapsonmilkcontainers,dualovenable trays,

susceptor inmicrowavepopcorn

•Usedtounitizeorgroupproducttogether(sixpack,

individualpouchesofcandy/chips)

•Usedtocommunicateandeducatetheconsumer

(vialabelwith5parts,servingsuggestions,menu

ideas,UPCcode)

FunctionsofFoodPackaging(Continued)

•Protecttheproductfromphysicaldamage.

(e.g.injectnitrogeninpotatochipbags)

•Protecttheproductfromtheenvironmental

contaminationfromdirt,insectsandair.

•Limittheoxygenaroundtheproduct.

(Thispreventsthegrowthofbacteriaandoxidation

rancidityonfoodinvacuumpackagedproducts)

•Limitthelossofmoistureintheproduct.

(Preventsthesurfacedehydrationoffoods)

TheCostofPackaging

•Thepackagingindustry,asawhole,isoneofthe

largestindustriesintheUnitedStatesandfood

packagingrepresentsabouthalfoftheoverall

packagingindustry.

•Foodpackagingisnotcheap.Itdoespayforitselfin

preventingfoodfromspoilage.

•Thecostofpackaginginmanycasesisgreaterthan

thecostoftherawingredientsusedtomakethe

food.

RequirementsforFoodPackaging

1)Benon‐toxic

2)Protectagainstcontaminationandgrowthof

microorganisms.

3)Actasabarriertomoistureandoxygen.

4)FilteroutharmfulUVlight

5)Provideresistancetophysicaldamage

6)Betransparent

7)Protectagainsttheingressofodorsand

environmentaltoxicants.

RequirementsforFoodPackaging

8)Betamper‐resistantortamperevident.

9)Beeasytoopen

10)Havedispensingandresealingfeatures

11)Bereadilydisposable

12)Meetsize,shapeandweightrequirements.

11)Haveappearance,printabilityfeatures

12)Belowcost

13)Becompatiblewiththefood

FOODPACKAGINGMATERIALS

FlexibleandSemirigidContainers

Plastics,glass,andmetalcans

CourtesyofBallCorporation

FoodPackagingMaterials

•Therearerelativelyfewmaterialsusedinfood

packaging(metal,glass,paperandpaperboard,

plastics)butwithineachofthesecategories,many

typesofpackagingmaterialsorcombinationsof

materialsareavailable.

•Forexample,withinthecategoryofplastics,there

areliterallyhundredsoftypesoffilmsand

laminatesvaryinginmoisturepermeability,gas

permeability,flexibility,burstingstrengthandsoon.

Metal

•Mostcansaremadeofeithersteeloraluminum.

•Steelcansarecommonforretortedfruitsand

vegetablesbecauseofthestrengthneededto

withstandtheexternalpressureexertedfrom

retorting.–lowpH=coatedinside

•Aluminumisusedprimarilyinthebeverageindustry

(softdrinksandbeer)sincealuminumisstructurally

weakandtheinternalpressurefromthecarbon

dioxideinthedrinkaddsthenecessarystrengthto

thecontainer.

Glass

•Glassischemicallyinertandanabsolutebarrierto

thepermeationofoxygenandwatervapor.

•Manyglasscontainersarebeingphasedoutofuse

toplastics.Forexample,milkandcoffeeusedtobe

soldinglassjarsbutnowcomeinplasticcontainers.

•Breakage,liabilityissues,shippingweight,energy

costtomanufactureareallreasonsthatglassis

slowlybeingreplacedbyplastic.

•Glassisprimarilyformedfromoxidesofmetals,

withthemostcommonbeingsilicondioxidewhich

iscommonsand.

Paper,PaperboardandFiberboard

•Theprincipledifferencesbetweenthesethreeare

thicknessandultimateuse.

•Papersarethin,flexibleandusedforbagsand

wraps.

•Paperboardisthicker,morerigidandusedto

constructsingle‐layercartons.

•Fiberboardismadebycombininglayersofstrong

papersandusedtoconstructsecondaryshipping

containersandisoftenreferredtoas“corrugated

paperboard”.

Plastics

•Theterm“plastics”referstoabroadrangeof

materialsthathavethecommonpropertyofbeing

composedofverylargelong‐chainmoleculesand

aremadebyconnectingsmallrepeatingmolecules

called“monomers”togetherinahead‐to‐tail

fashion,hencetheirname“polymers”.

•Scientistscameupwiththeconceptofpolymers

fromstudyingsomenaturaloccurringpolymers

suchasstarches,proteinsandnaturalrubber.

PolymersusedinFoodPackaging

•CelluloseAcetate

•Polyamide

•Polyesters

•Polyethylene

•Polypropylene

•Polystyrene

•Polyvinylidene chloride

•Polyvinylchloride

‐Cellophane

‐Nylon

‐PET,Mylar

‐Saran‐oxygenimpermeable

‐PVC–meatoverwrap

Laminates

•Onecanfusetogethervarioustypesofpaper,

plasticsandaluminumfoiltocreateaclassoffilms

calledlaminates.

•Theadvantageoflaminatesisthattheycombine

theadvantagesofcertainmaterialstoimprovethe

resultingfilm.

•Somecommerciallaminatesmaycontainupto8

layers.

EdibleFilms

•Ediblefilmshavebeenaroundforcenturies.Sausage

casingsareoneexample.

•Foodmaterialscanbeprotectedfromlossofvolatiles

orreactionfromotherfoodingredientsbybeing

encapsulatedinprotectiveediblematerials.

•Thiscanbeaccomplishedbysprayingathinfilmof

gelatin,gumarabic orotherediblematerialontoa

foodproduct.

•Thecoatingofraisinswithstarchestopreventthem

frommoisteningthepackagedbreakfastcerealisone

example.

EdibleFilms

•Ediblefilmsarealsousedtocoatfreshfruitsand

vegetablestoreducemoisturelossandprovide

increasedresistancetothegrowthofsurface

molds.

•Themostcommonandoldestediblefilmiswax.

•Awiderangeofproductssuchasapplesarewaxed

forappearanceandimprovedkeepingquality

FoodPackagingatAFIC

23 24

25 26

27 28

CostofPackaging

•Jars$.50‐$1.60/ea

•Cans;$0.97‐$2.37

•Bags‐ $.08‐$.10each;Cookin bagshigher

•Trays‐$.05‐ $.30

•Cups‐ $.80

•Packagelabel;B&W$.12;Color$.18

•Boxandboxendlabel;$1.12‐$2.30

Shelf‐lifeofFoods

•GototheURLbelowforballparkestimatesofshelf‐lifeofmany

foods.

•http://whatscookingamerica.net/Information/FreezerChart.htm

CONCLUSIONS

•Packagingisveryimportanttoyourproductshelf‐

lifeandlocation

•Packagingcanbeveryexpensive

•Packagingusedtocommunicatewithconsumerand

servestopromoteyourproduct

PLAN. PRODUCE. PROFIT. WORKSHOPS

For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

WALMARTFOODCATEGORIZATION

(SortedbyPreservationMethod)

BAKERY

Breadsandrolls

Cakes

Crackersandcookies

Chipsandsnackfoods



FRESHCROPS

Rawvegetables

Rawfruit



Frozenfoods

Pizzas

Pies

Vegetables

Juice

Icecream



CannedFoods

LowAcid

Highacidcannedfruits

Acidified

Acid

Cannedolives,pickles

Dips

Catchupandsauces

Freshjuice

MEAT

Groundmeat

Steaks

Roasts

Chicken

Turkey

Processedmeats

FishandSeafood



DAIRYPRODUCTS

Cheese

Butter

Cottagecheese

Cheeses(Sliced,Dicedandchunk)



DRYFOOD

Spices,drysoup

Sugar

Salt



BEVERAGES



DELI



PLAN. PRODUCE. PROFIT. WORKSHOPS

The Basics of Food Labeling

William McGlynn

Oklahoma State University

FederalFD&CActandFPLA

Big5Requirements:

•Statementofidentity

•Netquantityofcontents

•Nutritionlabeling

•Ingredientstatement

•Nameandplaceofbusinessofthe

manufacturer,packerordistributor

LanguageRequirements

•Allmandatorylabelingstatementsmust

appearinEnglish

•Ifanyrequiredstatementsareinaforeign

language,thenallotherrequiredstatements

mustappearinthatlanguageaswellasin

English

(21CFR101.15)

MandatoryLabelStatements

•Insomecases

–Example,21CFR§172.804forfood

productscontainingaspartame

•PHENYLKETONURICS:

CONTAINSPHENYLALANINE

AnatomyofaLabel

•PrincipalDisplayPanel(PDP)

–Portionofthepackagelabelthatismostlikelyto

beseenbytheconsumeratthetimeofpurchase

•InformationPanel(IP)

–ImmediatelytotherightofthePDP,asdisplayed

totheconsumer

Principal Display Panel

•Thatpartofthelabelmostlikelytobeseenby

theconsumeratthetimeofpurchase

•Mustinclude:

–Statementofidentity

–Netquantityofcontents

(21CFR101.1)

Alternate PrincipalDisplayPanel Alternate PrincipalDisplayPanel

InformationPanel

•Thatpartofthelabelimmediately

contiguousandtotherightofthePDP

•Includes:

–Nutritionlabeling

–Ingredientstatement

–Nameandplaceofbusinessofthe

manufacturer,packerordistributor

(21CFR101.2)

InformationPanel

•Allthreelabel

elementsmustappear

togetherwithout

interveningmaterial

•Nutritionlabelingmay

movetoanotherpanel

(21CFR101.2)

StatementofIdentity

•Mustbeoneoftheprincipalfeaturesonthe

PDP

•Mustappearinboldtype

•Shouldbeatleastonehalfthetypesizeofthe

largestprintedmatteronthePDP

(21CFR101.3)

StatementofIdentity

1. Namespecifiedbylaworregulation

2. Commonorusualname

3. Appropriatelydescriptivenameorfanciful

term

(21CFR130‐169and21CFR102)

StatementofIdentity:FoodTypes

•Imitation

•Substitute

ImitationFoods

•Substitutesforandresemblesanotherfood

butisnutritionallyinferior

•“Imitation”

–Precedesthenameoftheresembledfood

–Equalprominenceonthelabel

(21CFR101.3)

NutritionalInferiority

•Anyreductioninanessentialnutrientthatis

presentina“measurableamount”,i.e.:

–2%ormoreoftheDRVofproteinandpotassium

–2%ormoreoftheRDIofanyvitaminormineral

(exceptselenium,molybdenum,chromium,and

chloride)

•Fatandcaloriesarenotconsideredwhen

determiningnutritionalinferiority[21CFR

101.3(e)]

SubstituteFoods

•Substitutesforandresemblesanotherfood

–AreNOTnutritionallyinferior

–AreNOTanimitationfood

•Labelbearsacommonorusualnameas

definedin21CFR102.5

–Non‐misleadingcommonorusualname

NetQuantityofContents

•MetricandU.S.customaryinch‐poundsystem

declarationrequired

•Amountoffoodinapackageexclusiveof

wrappersandpackingmaterial

–Weightormass

–Dryorfluidmeasure

–Numericalcount

–Combination(numericalcountandweightormeasure)

•Qualifyingphrasesortermsnotpermitted,e.g.,

“large”,“jumbo”(21CFR101.105)

NetQuantityofContentsFormat

•Mustbeprominentandconspicuous

•Mustappearinboldtype

•Mustbeindistinctcontrasttootherlabel

information

•Mustbeinproportiontotheareaofthe

PDP

NetQuantityofContentsSize

Area of PDP Minimum Type Size

≤ 5 in2(32 cm2) 1/6 in (1.6 mm)

5 in2to 25 in21/8 in (3.2 mm)

25 in2to 100 in23/16 in (4.8 mm)

100 in2to 400 in21/4 in (6.4 mm)

> 400 in21/2 in (12.7 mm)

NetQuantityofContents

Placement

•MustappearonthePDPor

alternatePDP

•Locatedinlower30

percentofPDP

•Linesgenerallyparallelto

thebase

NetQuantityofContentsExamples

•NetMass425g(15oz)

•NetWt15oz(425g)

•Net12floz(355mL)

•Netcontents1gal(3.79L)

•500mL(1pt0.9floz)

•1L(1qt1.8floz)

–(FRMay21,1993)

IngredientLabeling

•Allingredientsusedtofabricateafoodmust

belistedintheingredientstatementbytheir

commonorusualname

•Except,ifcoveredbyanexemption

(21CFR101.4)

IngredientLabelingExemptions

•Singleingredientfoods

•Incidentaladditivesaslongastheyare

–Notfunctionalinfinishedfoods

–Insignificantamounts

–Ingredientsofingredients

–Processingaids

–Substancesmigratingtofoodfromequipment

orpackaging

IngredientLabelingRequirements

•Allingredientsmustbelistedindescending

orderofpredominancebyweight

•EXCEPTingredientspresentinamountsof

2%orlessmaybelistedattheendofthe

ingredientstatementfollowedbya

qualifyingstatement:

–“contains#percentorlessof…”

Multi‐ComponentIngredients

•Listthemulti‐componentingredient

followedbyaparentheticallistingofall

ingredientsinthemulti‐component

ingredient,OR

•Incorporateeachingredientofthemulti‐

componentingredientintotheoverall

ingredientstatementwithoutdeclaringthe

multi‐componentingredient

CollectiveTerms

•Some ingredientsandtheirconcentratescan

bedeclaredbycollectiveterms

–e.g.,milk,concentratedmilk,reconstitutedmilk,

anddrywholemilkmaybedeclaredas“milk”

(21CFR101.4)

Spices,Flavorings,andColorings

•Spices,flavorings,andcoloringsnotrequired

tobecertified maybedeclaredasspices,

flavorings,andcolors

–Thecollectiveterm“spices”doesnot include

substancestraditionallyregardedasfood,e.g.

onion,garlic,andcelery

–All coloringisartificial

(21CFR101.22)

“And/Or”LabelingProvisions

•Fatsandoils‐ 101.4(b)(14)

•Leaveningagents‐ 101.4(b)(16)

•Yeastnutrients‐ 101.4(b)(17)

•Doughconditioners‐ 101.4(b)(18)

•Firmingagents‐ 101.4(b)(19)

•Surimi‐ 101.4(b)(23)

FatsandOils

•Oilingredientsmustbedeclaredby

commonorusualname,e.g.,

“cottonseedoil”

•Hydrogenatedoilsmustbedeclaredas:

“hydrogenated____oil”

•Partiallyhydrogenatedoilsmustbe

declaredas:

“partiallyhydrogenated____oil”

INGREDIENTS: Corn Meal, Vegetable

Oil (Contains one or more of the

following: Cottonseed, Soybean,

Partially Hydrogenated Soybean or

Partially Hydrogenated

Cottonseed),Whey, Salt,

Maltodextrin, Delactosed Whey, Dried

Cheddar and Blue

Cheeses (Pasteurized Milk, Cheese

Cultures, Salt, Enzymes), Torula Yeast,

Yellow No. 5, Disodium Phosphate,

Monosodium Phosphate, Natural

Flavors, Yellow No. 6, Autolyzed

Yeast, Annatto, and Beta Carotene.

OtherIngredientLabeling

Provisions

•“Sugar”referstosucrose forpurposesof

ingredientlabeling

•Wateraddedinexcessoftheamountneededto

reconstituteaningredienttosinglestrengthmust

bedeclaredintheingredientstatement

•“Nondairy”foodsthatcontainacaseinate

ingredientmust identifythecaseinateasamilk

derivative

OtherIngredientLabelingProvisions

•Percentjuicedeclarationisrequiredonbeverages

thatcontainorarerepresentedascontainingfruit

orvegetablejuice,e.g.“100%Juice”

•Coloradditivesandlakesrequiredtobecertified

mustbedeclaredbycommonorusualname,e.g.

“FD&CBlueNo.1”,“Blue1”,“Blue1Lake”

OtherIngredientLabelingProvisions

•Standardizedfoodsmustlistalltheir

ingredientsintheingredientlist

–INGREDIENTS:MILK,CREAM,SUGAR,NATURAL

VANILLAFLAVOR

INGREDIENTS:MILK,CREAM,SUGAR,NaturalVanilla

Flavor

Nameandplaceofbusinessofthe

manufacturer,packer,ordistributor

•MustappearonPDPorIP

•Mustinclude:

–Nameofmanufacturer,packeror

distributor

–StreetAddress(ifnotincurrent

directory)

–City

–State

–ZipCode

(21CFR101.5)

Nameandplaceofbusinessofthe

manufacturer,packerordistributor

•Principalplaceofbusinessmaybelistedifthe

foodismanufacturedatasiteotherthanthe

principalplaceofbusiness

•Termsthatmaybeusedifthefoodisnot

manufacturedbythecompanynamedonthe

label:

–“Manufacturedfor”

–“Distributedby”

–“Importedby”

CountryofOrigin

•U.S.BureauofCustomsandBorderProtection

(CBP)requirement(19CFR)

•NosmallerthanU.S.nameandaddress

•NoabbreviationsexceptaspermittedbyCBP

•Multiplecountrieslistedinanyorder

CountryofOrigin

•Repackersmustmarkrepackagedimports

withEnglishnameofthecountryoforigin,

e.g.:

–“ProductofSpain”

–“ProductofSpainandUSA”

Made in Italy

Sourcesforlabels

•Helpfultofindaprintshopwithexperiencein

printingfoodlabels.

•Stickingwithstandardlabelstockwillhelp

minimizecosts.

–Containersshouldbeselectedwithaneyetoward

easeoflabeling,amongotherthings.

•Largerprintingrunswillreducecosts–also

givesmorepotentialforwaste.

PLAN. PRODUCE. PROFIT. WORKSHOPS

For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

PLAN. PRODUCE. PROFIT. WORKSHOPS

Food Regulations

Steve Seideman

Extension Food Processing Specialist

Whatisallthis?

•GMPs

•HACCP

•SOP

•Policy

•SSOP

•GAP

•GHPs

•FoodCode

•Manufacturing

Regulations

•RetailFoodEstablishment

•PHF

•GRAS

Thesedealwithfoodregulations

•GMPs(GoodManufacturing

Practices)

•HACCP(HazardAnalysisCritical

ControlPoint)

•SOP(StandardOperating

Procedure)

•Policy–Acompany’sstated

positiononsomeissue

•Procedure –Astatedstepby

stepstatementdescribinghow

todosomething

•SSOP(SanitationStandard

OperatingProcedure)

•GAP(GoodAgricultural

Practices)

•GHP(GoodHandlingPractices)

•FoodCode

•ManufacturingRegulations

•RetailFoodEstablishment

•PHF(PotentiallyHazardous

Foods)

•GRAS(GenerallyRecognizedas

Safe)

WhoRegulatesWhat?

•Rawagriculturalproducts,Milk,Eggs–Arkansas

DepartmentofHealth(ADH)

•ProcessedFoods(Anythingdonetofoodsbeyond

washing)– Food&DrugAdmin(FDA).But

subcontractedtoADHforcompliance.

•Servingfood – Restaurantinspection(Arkansas

DepartmentofHealth‐ ADH)

•RedMeat&Poultry–U.SDepartmentof

Agriculture;FoodSafetyandInspectionService.

(USDA/FSIS)

JurisdictionofInspection

•Restaurant– FoodServedonpremises.FoodCode

2009.Stateinspection.

•ManufacturedFood–FDAjurisdiction/Stateunder

FDAcontractforinspection.

•Meat – Ifover2/3%poultry/redmeat–USDA/FSIS

jurisdiction.Ifless2/3%,FDAjurisdiction

•Milk&Cheeses– Stateinspection

•Eggs – Stateinspection

•CottageIndustries– Stateinspection

WhyareFoodsRegulated?

•Toensuresafety andwholesomeness

•Topreventfraudanddeception

•Toinformconsumers aboutthenutritionalcontent

offoods

•Perphoto– inspectionusedtobeveryphysical

lookingforfilth.Nowitisanoverviewofyour

documentation.

ArkansasRetailandRestaurant

Regulations

•Thedocument“RulesandRegulationspertainingto

FoodEstablishments”

•Jurisdictionoverretailfoodstores,restaurants,

churches,schoolsetc

•Foodservedorgiventotheconsumer(unlike

manufactured/processedfood)

•A“RetailFoodEstablishment”is“anoperationthat

stores,preparespackages,serves,vendsorotherwise

providesfoodforhumanconsumption.”These

requirementsmustbemetregardlessofwhetherthe

foodisbeingsoldorgivenaway.

•FoodCode2009.Inspectedannually

URLsforFoodEstablishments(Stores,

restaurants,churches,schoolsetc)

•Rulesandregulationspertainingtofoodestablishments

http://www.healthy.arkansas.gov/aboutadh/rulesregs/foodserviceestablishmentsnew.pdf

•FoodEstablishmentPermitApplication

http://www.healthy.arkansas.gov/programsServices/environmentalHealth/foodProtection/Docume

nts/FoodPermitApplication.pdf

•PlanReviewGuidelinesforfoodestablishments

http://www.healthy.arkansas.gov/programsServices/environmentalHealth/Documents/Guidelines/

RetailPlanReviewGuidelines.pdf

•FoodCode2009

http://www.fda.gov/Food/GuidanceRegulation/RetailFoodProtection/FoodCode/UCM2019396.htm

ManufacturedFood

•FDA/Statejurisdiction

•Allfoodexceptmeat,milkandeggs

•URL–21CFR(FDA)

•http://www.ecfr.gov/cgi‐bin/text‐

idx?SID=cb929c20e0d8cc4c5e48fcfb05061c8e&tpl=

/ecfrbrowse/Title21/21cfrv2_02.tpl#0

URLsforFoodProcessingPlants

•PlanreviewGuidelinesforManufactured/WholeFood

Establishments

•http://www.healthy.arkansas.gov/programsServices/environmentalH

ealth/Documents/Guidelines/MFGPlanReviewGuideline.pdf

•RulesandRegulations;GoodManufacturingPractices

•http://www.healthy.arkansas.gov/aboutADH/RulesRegs/FoodGoodM

anufacturingPractices.pdf

•ArkansasDepartmentofHealthStateOffice

4815WestMarkham

LittleRockAR72205

501/661‐2171

MeatandMeatProductsinspection

•Productscontaining2/3%meat.

•Includesbothrawandprocessedmeatproducts

•USDAjurisdiction– butallsurroundingstatesalsohavestate

meatinspectionprograms

•URL–9CFR

•http://www.gpo.gov/fdsys/browse/collectionCfr.action?colle

ctionCode=CFR&searchPath=Title+9%2FChapter+III%2FSubc

hapter+E&oldPath=Title+9%2FChapter+III&isCollapsed=true

&selectedYearFrom=2014&ycord=297

•USDA/FSISDistrictOffice

4700S.Thompson

Springdale,AR72764

479/751‐8412

Milk

•Stateinspection‐

http://www.healthy.arkansas.gov/aboutADH/RulesRegs/MilkandMilk

Products.pdf

•Rawmilk

•http://www.healthy.arkansas.gov/programsServices/environmentalH

ealth/MilkProgram/Pages/default.aspx

•Q&AonRawmilk.

•http://www.healthy.arkansas.gov/programsServices/environmentalH

ealth/MilkProgram/Pages/MilkProgramFrequentlyAskedQuestions.as

Eggs

•Stateinspection

•UnderArkansasLivestockandPoultryCommission

•http://alpc.arkansas.gov/regulations/Documents/Eg

greg97.pdf

CottageIndustries

•Statecontrol

•Watchoutgoggling“CottageIndustries”.Mayget

otherstates

•http://www.healthy.arkansas.gov/programsServices

/environmentalHealth/foodProtection/Documents/

CottageFoodGuidelines.pdf

FDARegulations

•OnceyouareinTitle21,gotoParts100‐169.

•http://www.ecfr.gov/cgi‐bin/text‐

idx?SID=cb929c20e0d8cc4c5e48fcfb05061c8e&tpl=/ecf

rbrowse/Title21/21cfrv2_02.tpl#0

Parts101and104dealwithlabelingandnutritional

labelingrespectively.

Part110–CoversfoodGMPs

Part113‐Coverslowacidcannedfoods

Part114‐Coversacidifiedfoods

Part120–CoversHACCP

Parts130‐169–Coversfoodstandardsofidentity

FDAStandardsofIdentity

•CFR21;Parts130– 169

•http://www.ecfr.gov/cgi‐bin/text‐

idx?SID=cb929c20e0d8cc4c5e48fcfb05061c8e&tpl=

/ecfrbrowse/Title21/21cfrv2_02.tpl#0

InspectionPrograms

•GMPs

•HACCP

•PrerequisitePrograms–recallpolicy;allergen

controlpolicy,etc

•SOPs,SSOPs,Policies,Procedures

•Other– labels,standardsofidentity,cottage

industries

FoodSafetyPrograms

GMPs

HACCP

SSOPs

Prerequisite Programs

GMPs

•ShortforGoodManufacturingPractices

•GMP’s‐ Areasetofprocedurestobecarriedoutbyaplanttoinsure

thatthefooditproducesisnotadulterated

•Themotherofallfoodsafety

•Readittodeterminewhatyouneed–Glasscontrolpolicy,

temperaturecontrol?

•http://www.healthy.arkansas.gov/aboutADH/RulesRegs/FoodGoodM

anufacturingPractices.pdf

AreasofGMPs

•Personnel‐diseasecontrol,cleanliness,educationandtraining,

supervision

•Equipment– addressesthecleanlinessandoperationofequipment

•ProcessingOperations– addressestheactionsthatareperformedon

foods.

•Environmental(plantandGrounds)– addressesthecleanlinessand

operationalreadinessofthefacilityandsurroundings.

SOMEIMPORTANTPREREQUISITE

PROGRAMS

•PestControl

•MasterCleaningprogram(notdaily

butdeepcleaning)

•Maintenanceprogram

•VisitorProgram

•GMPTraining

•RecallProgram

•AllergenProgram

•LabelVerificationProgram

•WeightControlProgram

•ManufacturingCodes(and

processingspecifications)

•ProcessAuthorityApprovaland

similarapprovals

•IncomingRawMaterials

•TemperatureControlProgram

•BrokenGlassandBrittlePlastic

program

•ChemicalControlProgram

ProgramPerHastingsMikeDavisClients

Orgchart/Manager/Water/Sewer XX

GMPsincludingtrainingXX

PestcontrolXx

AllergenProgram XXX*

WeightControlProgramX

InspectionProgram

SSOPs XX

MetalDetectionX

LotCodingX*

ReceivingProgramX

ShippingProgramX

Specification/ManfCodes XXX*

RecallProgramXXX*

Glass/HardPlastic/Woodprogram

Microprogram

BiosecuirtyProgram(Optional?)

LabelsApprovals(NotFDA

required?)

Proceduresandforms

InspectionDefinitions

•Policy–Corporatedocumentstatingthisparticular

actionwillbedone(traceability,mockrecall,recall

policy).

•Procedure – detailedplant(vscorporate)document

thatisdescribesaparticularaction(who,what,

howitistobedone)

•SOP – StandardOperatingProcedure(Howtodoa

particulartask)

•SSOP – SOPwrittentodescribeasanitation

operation(e.g.howtodisassembleandwash,rinse

andsanitizeapieceofequipment)

IntroductiontoHACCP

•HACCPisreallyallaboutprevention.Knowledgeofthe

hazardsandprocedurestocontrolthehazardswill

preventfoodborneillnessinfoodprocessingplants.

Identifyapotentialproblemearlyandpreventitfrom

becomingarealproblemlater.

•HazardAnalysisCriticalControlPoint

•Processoflookingatfoodproductionfrombeginning

toend,anddeterminingthepointswhereproblems

withfoodsafetycanoccur.

•Verifying andRecording foodtemperaturesand

StandardOperatingProcedures

•TrainingstafftofollowHACCPandtakecorrective

action whenneeded.

TheSevenPrinciplesofHACCP

•1)Conductahazardanalysis.Preparealistofsteps

intheprocesswheresignificanthazardscouldoccur

anddescribethepreventivemeasures.

•2)IdentifytheCriticalControlPoints(CCPs)inthe

process.

•3)Establishcriticallimitsforpreventive

measurementsassociatedwitheachidentifiedCCP.

•4)EstablishCCPmonitoringrequirements.Establish

proceduresforusingtheresultsofmonitoringto

adjusttheprocessandmaintainthecontrol.

TheSevenPrinciplesofHACCP

•5)Establishcorrectiveactionstobetakenwhen

monitoringindicatesthatthereisadeviationfrom

anestablishedcriticallimit.

•6)Establisheffectiverecord‐keepingproceduresthat

documenttheHACCPsystem.

•7)Establishproceduresforverificationthatthe

HACCPsystemisworkingcorrectly.

HACCP

•USDA/FSISrequiresHACCPplansinallredmeatand

poultryprocessingfacilities.

•FDAonlyrequiresHACCPinfacilitiesthatprocess

fruitandvegetablejuicesandseafoods,fishandfish

products.ComingaspartofFSMA.

•Youwillbe(infuture–1‐2years)berequiredto

haveaHACCPplan

PLAN. PRODUCE. PROFIT. WORKSHOPS

For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors



THEMAINGMPs



GMPs: Personnel; 21 CFR, Part 110 Section 110.10

• 1. Are the employees well-trained in what they do? You can avoid many problems

by making sure that your employees clearly understand their functions.

• 2. In handling food products, do your employees wear the proper hair covering,

beard covering, disposable gloves and clean uniforms?

• 3. Are your employees wearing jewelry, rings, watches, fingernail polish or

bandages?

• Do your employees have any illnesses, infections or injuries (i.e., boils, cuts) that

can contaminate foods in the production area?

• 4. Do your employees wash and sanitize their hands after each visit to the toilet?

Do you have washing facilities available for your employees near their work

stations?

Do they use them when their hands become soiled or contaminated?

• 5. Do your employees maintain clean personal habits?

• 6. Is the traffic within your plant controlled to prevent contamination of the

production area?

Do visitors wear proper outfits and hairnets?

• 7. Have your employees been told the reasons why they should undertake the

above precautions?

• Has this training been done through GMP classes? Is the training documented?

GMPs: Buildings and Facilities: Plant and Grounds; 21 CFR, Part 110, Section

110.20

• 1. Is the area around your firm clear of litter, weeds, grass and brush?

• 2. Is there any standing water on your grounds (which also attracts pests)?

• 3. Are floors, walls, ceilings, windows and screens properly maintained and

cleaned?

There should be no flaking paint anywhere above the production area.

• 4. Do production area doors and windows to the outside have fine mesh screens

to keep out insects? If not, are they tightly sealed?

• 5. Will a pencil pass under the door?

• 6. Have all holes and cracks been filled so as not to provide hiding places or

entry points for pests?

• 7. Are there any evidence of the presence of domestic animals such as cats and

dogs?

• 8. Are rest rooms cleaned regularly?

• 9. Are the hand-washing facilities furnished with paper or air hand dryers and

soap?

• 10. Are there any leaks in the roof, sky lights, windows, screens or overhead

piping?

• 11. Are the overhead lights covered with shields to prevent contamination of

products by broken glass in case the lamps burst?

•

GMPs: Buildings and Facilities: Sanitation Operations: Pest Control 21 CFR, Part

110 Section 110.35 (a)(c)

• 1. Do you have professional pest control services?

• 2. Do you check regularly on what the pest control operator is doing?

• 3. Do you have documentation on what chemicals are being used?

• 4. Are mites, weevils or roaches apparent in the plant? There should be no

evidence of their presence.

• 5. Do you have enough bait stations?

• 6. Are you using fumigation safely?

• 7. Are the pest control logs and documentation readily available?

• 8. Are pesticides or application equipment stored safely?

• 9. Are products stored on pallets and at least 18 inches away from the walls?

• 10. Is your facility well-maintained?

GMPs: Buildings and Facilities: Sanitary Facilities and Controls 21 CFR, Part 110

Section 110.37

• 1. Is trash, debris and clutter picked up, both inside and outside the plant, so as

not to provide hiding places for pests?

• 2. Are all sanitation chemicals used in the plant USDA/FDA approved?

• 3. Do employees eat, drink and use tobacco products only in designated areas,

and not in the production area or warehouse?

• 4. Is the food spilled or uneaten by employees cleaned up quickly so as not to

attract pests or breed bacteria?

• 5. Has old rodent excreta been cleaned up so you can spot any new activity?

• 6. Is garbage quickly removed and dumped in appropriate bins? It should not sit

around your facilities to attract pests and develop odors.

• 7. Is the garbage kept covered? An open garbage pile is an excellent breeding

ground for insects and rodents.

• 8. Is the water used in your firm from an approved source (either municipal

supply or tested private source)?

• 9. Have you made sure there are no hoses left dangling in sinks or on the

ground?

Loss of pressure can cause a back flow that will contaminate your water

supply.

• 10. Do your facilities have back flow and vacuum breaker valves to prevent

contaminate your water supply?

• 11. Is there standing water around your firm (particularly in the production area,

warehouse and pack-off area)?

GMPs: Equipment 21 CFR, Part 110 Subpart C

• 1. Is all equipment that comes in contact with food cleaned and sanitized as often

as necessary to prevent contamination of the product? You should follow

appropriate cleaning schedules for each piece of equipment.

• 2. Is the equipment designed, or otherwise suitable, for use in a food plant? For

example, equipment for handling or processing foods cannot contain

polychlorinated biphenyls (PCBs), which are very toxic (this does not apply to

electrical transformers and condensers containing PCBs in sealed containers).

• 3. Is there a build-up of food or other material on the equipment? This can serve

as a breeding place for insects and bacteria.

• 4. Is there any build-up or seepage of cleaning solvents or lubricants on your

equipment, which can contaminate foods? All repairs on equipment should be of

a permanent nature (e.g., no bobby pins in place of cotter pins), as temporary

repair parts can break or rupture and get in the food product.

• 5. Is the equipment hard to disassemble for clean-up and inspection? The more

difficult it is, the less inclined you or an employee will be to clean it.

• 6. Is there a lot of “dead space” in or around the machinery where food and other

debris can collect as a nest for insects and bacteria?

• 7. Can the surface of the equipment be sanitized?

GMPs: Production and Process Control 21 CFR, Part 110 Section 110.80

• 1. Is all equipment that comes in contact with food cleaned and sanitized as often

as necessary to prevent contamination of the product? You should follow

appropriate cleaning schedules for each piece of equipment.

• 2. Is the equipment designed, or otherwise suitable, for use in a food plant? For

example, equipment for handling or processing foods cannot contain

polychlorinated biphenyls (PCBs), which are very toxic (this does not apply to

electrical transformers and condensers containing PCBs in sealed containers).

• 3. Is there a build-up of food or other material on the equipment? This can serve

as a breeding place for insects and bacteria.

• 4. Is there any build-up or seepage of cleaning solvents or lubricants on your

equipment, which can contaminate foods? All repairs on equipment should be of

a permanent nature (e.g., no bobby pins in place of cotter pins), as temporary

repair parts can break or rupture and get in the food product.

• 5. Is the equipment hard to disassemble for clean-up and inspection? The more

difficult it is, the less inclined you or an employee will be to clean it.

• 6. Is there a lot of “dead space” in or around the machinery where food and other

debris can collect as a nest for insects and bacteria?

• 7. Can the surface of the equipment be sanitized?

PLAN. PRODUCE. PROFIT. WORKSHOPS

Liability Issues with Food Processing

Rusty W. Rumley

Senior Staff Attorney with the National Agricultural Law

Center

Introduction

The National Agricultural Law

Center

Arkansas Cottage Food Law

Product Liability

Tools for Liability Protection

Arkansas Cottage Food Law

Whatdoesitdo?

(1)“Cottagefoodproductionoperation”meansaperson

whoproducesfooditemsintheperson'shomethatare

notpotentiallyhazardousfoods,includingwithout

limitation:

(A)Bakeryproducts;

(B)Candy;

(C)Fruitbutter;

(D)Jams;

(E)Jellies;and

(F)Similarproductsspecifiedinrulesadoptedbythe

DepartmentofHealth

Ifyoumeettherequirementsthanyouareexemptfrom

permittingthroughARDepartmentofHealth

Arkansas Cottage Food Law

Whendoesitapply?

(vi)(a)Acottagefoodproductionoperation,

ontheconditionthattheoperationoffersits

productsdirectlytotheconsumer:

(1)Fromthesitewheretheproductsare

produced;

(2)Atafarmers'market;

(3)Atacountyfair;or

(4)Ataspecialevent.

Itdoesnotworkforinternetsales.

Exemption from Permitting Requirements - Arkansas

Code § 20-57-201 – People Exempted

A person at a farmers' market that offers for sale only one

(1) or more of the following:

(a) Fresh unprocessed fruits or vegetables;

(b) Maple syrup, sorghum, or honey that is produced by a

maple syrup or sorghum producer or beekeeper; or

(c) Commercially prepackaged food that is not potentially

hazardous, on the condition that the food is contained in

displays, the total space of which equals less than one

hundred cubic feet (100 cu. ft.) on the premises where the

person conducts business at the farmers' market;

Arkansas Cottage Food Law Prepackaged Foods

(b)(1) Upon request, each product offered under

subdivision (2)(B)(vi)(a) of this section shall be made

available to the Department of Health for sampling.

(2) Each product shall be clearly labeled and shall

make no nutritional claims.

(3) The label required under subdivision (2)(B)(vi)(b)(2)

of this section shall include the following:

(A) The name and address of the business;

(B) The name of the product;

(C) The ingredients in the product; and

(D) The following statement in 10 point type: “This Product is

Home-Produced”;

What does the Cottage Food Law NOT do…

Cottage food laws do not

provide liability protection

Risk of legal liability can be

reduced through things such as:

Business organizations

Insurance

Best Practices/HACCP

Product Liability

You are potentially liable for any injuries caused by

your product.

•Strict Product Liability

•Negligence

•Implied Warranty for Fitness of Use

It is up to the Plaintiff’s attorney to choose their

cause of action which means you must prepare to

address liability BEFORE it happens.

Product Liability

Under Arkansas law, products liability plaintiff must

prove that product as supplied was defective so as to

render it unreasonably dangerous and that such

defect was proximate cause of accident; it must be

shown that product was in defective condition at time

it left hands of particular seller. Ark. Code Ann. § 16-

116-102 (West)

Negligence - The difference is that with negligence they

either have to prove that you knew or should have

known that your product was dangerous.

Liability Protection

No solution is 100% effective…car

example

Some “tools” for liability protection:

•Business entities

•Insurance

•Liability Planning/Training

Business Entities

Sole Proprietorship

General Partnership

Limited Partnership

Limited Liability Corporation

Corporations

-Subchapter “S”

-Subchapter “C”

The Business Structure

What is so Important about a

Business Structure?

Liability Protection – separating assets so that a

creditor or plaintiff cannot take everything you

own

Also useful for taxes and estate planning

Business

Organizationsare

like“firebreaks”

andnotshields

640Acresection

ofland.

Respect the Business Structure

At the end of the day, Courts will only

respect your business structure as much as

you do.

What does this mean?

◦You HAVE to keep the business separate from

your personal life and from other businesses that

you run.

◦Keep separate bank accounts, business records,

etc…

◦Don’t use business funds for the family vacation

The Sole Proprietorship

Liability of Owners

-100% liability for the business debt

- Creditors will be able to reach your personal assets as

well as what you invested into the business.

- This means that property such as your land,

your home, your personal bank accounts are at

risk!

Legal Status

-Not a separate legal entity

-You would be sued directly.

The General Partnership

Definition

-An association of two or more “persons” who

agree to carry on as co-owners of a business

for profit.

-No intent is necessary to form a general

partnership and it is possible to create one

without intending to.

The General Partnership

Liability

- Each partner is jointly and severally liable

for the debts of the business.

- Not only are you personally liable for the

debts and actions of the business (just like

the sole proprietorship), but you are also

responsible for all of the other partners

actions

- Creditors can reach your personal assets, in

addition to what you have invested into the

business

The General Partnership

Liability

- Each partner is jointly and severally liable

for the debts of the business.

- Not only are you personally liable for the

debts and actions of the business (just like

the sole proprietorship), but you are also

responsible for all of the other partners

actions

- Creditors can reach your personal assets, in

addition to what you have invested into the

business

In Re Simmons (Arkansas 2007)

Simmons farming operation was in

financial trouble and filed for Chapter 7

which would discharge many of the debts.

Simmons’ son, and general partner,

produced a forged personal guarantee on

a loan that Simmons had no knowledge of

at the time (he later found out about it)

Court held that the Son’s actions imputed

fraud to ALL partners so no discharge

was allowed.

In Re Simmons (Arkansas 2007)

Simmons farming operation was in

financial trouble and filed for Chapter 7

which would discharge many of the debts.

Simmons’ son, and general partner,

produced a forged personal guarantee on

a loan that Simmons had no knowledge of

at the time (he later found out about it)

Court held that the Son’s actions imputed

fraud to ALL partners so no discharge

was allowed.

The Limited Liability Company (LLC)

LLC – created in the 1970s

- Provides protection to personal assets

- Made up of “members” rather than “partners”

Liability

- Members’ personal assets are protected from

creditors of the business.

- Creditors can only reach that which has been

invested or pledged to the business

The Limited Liability Company (LLC)

LLC – created in the 1970s

- Provides protection to personal assets

- Made up of “members” rather than “partners”

Liability

- Members’ personal assets are protected from

creditors of the business.

- Creditors can only reach that which has been

invested or pledged to the business

The Limited Liability Company (LLC)

Legal Status

- Recognized as separate legal entity

Formation

- Can be formed with 1 or more members

- Created by delivering Articles of Organization to the

Secretary of State’s office

- Must include

- Name of LLC

- Address of LLC

- Agent for service of process

- Certain reports must be filed each year to maintain

LLC status

Business Entity Tips

Keep your financial accounting separate from your

personal life.

Ensure that all of the requirements to form a

business entity are followed (corporate formalities)

Pay your annual fee.

Insurance tips

Who should purchase it?

You or your business entity

Who should have their name on the

policy?

What type of insurance do they have?

Many common policies (general farm and

homeowners) may not provide protection.

Make the insurance agent aware of any

changes and that they are covered by the

policy (in writing)

Check in yearly to see if coverage has

changed

What are the exclusions?

Liability Planning/Training

There are many resources that provide

things to think about BEFORE starting a

new business venture.

◦Learning from your mistakes is a great idea,

but also learn from the mistakes of others

because you will never live long enough to

make them all yourself!

Liability Planning/Training

Training

Keep records of any training or

certifications that you get

Why?

Planning

Have a HACCP or similar plan to spot potential problem

spots

Not just food prep, but where the customers are

Talk with other people about their plans on dealing with

potential liability

Inspections and recordkeeping

PLAN. PRODUCE. PROFIT. WORKSHOPS

For More Information:

http://afic.uark.edu/training.html

PLAN. PRODUCE. PROFIT. WORKSHOPS

Sponsors

University of Arkansas · Division of Agriculture

www.NationalAgLawCenter.com

Arkansas Cottage Food Law

Compiled February of 2015

§ 20-57-201. Definitions

As used in §§ 20-57-202 -- 20-57-205:

(1) “Cottage food production operation” means a person who produces food items in the person's home

that are not potentially hazardous foods, including without limitation:

(A) Bakery products;

(B) Candy;

(D) Jams;

(E) Jellies; and

(F) Similar products specified in rules adopted by the Department of Health;

(2)(A)(i) “Food service establishment” means any place where food is prepared, processed, stored, or

intended for use or consumption by the public regardless of whether there is a charge for the food.

(ii) “Food service establishment” includes wholesale and retail food stores, convenience stores, food

markets, delicatessens, restaurants, food processing or manufacturing plants, bottling and canning plants,

wholesale and retail block and prepackaged ice manufacturing plants, food caterers, and food warehouses.

(iii) “Food service establishment” does not include supply vehicles or locations of vending machines.

(B) The following are also exempt:

(i) Group homes routinely serving ten (10) or fewer persons;

(ii) Daycare centers routinely serving ten (10) or fewer persons;

(iii) Potluck suppers, community picnics, or other group gatherings where food is served but not

sold;

(iv) A person at a farmers' market that offers for sale only one (1) or more of the following:

(a) Fresh unprocessed fruits or vegetables;

(b) Maple syrup, sorghum, or honey that is produced by a maple syrup or sorghum

producer or beekeeper; or

that the food is contained in displays, the total space of which equals less than one

hundred cubic feet (100 cu. ft.) on the premises where the person conducts business at the

farmers' market;

(v) A person who offers for sale at a roadside stand only fresh fruits and fresh vegetables that are

unprocessed;

(vi)(a) A cottage food production operation, on the condition that the operation offers its products

directly to the consumer:

(1) From the site where the products are produced;

(2) At a farmers' market;

(3) At a county fair; or

(4) At a special event.

(b)(1) Upon request, each product offered under subdivision (2)(B)(vi)(a) of this section shall be

made available to the department for sampling.

(2) Each product shall be clearly labeled and shall make no nutritional claims.

(3) The label required under subdivision (2)(B)(vi)(b)(2) of this section shall include the

following:

(A) The name and address of the business;

(B) The name of the product;

(D) The following statement in 10-point type: “This Product is Home-Produced”;

(vii) A maple syrup and sorghum processor and beekeeper if the processor or beekeeper offers

only maple syrup, sorghum, or honey directly to the consumer from the site where those products

are processed;

(viii) A person who offers for sale only one (1) or more of the following foods at a festival or

celebration, on the condition that the festival or celebration is organized by a political subdivision

of the state and lasts for a period not longer than seven (7) consecutive days:

(a) Fresh unprocessed fruits or vegetables;

(b) Maple syrup, sorghum, or honey if produced by a maple syrup or sorghum processor

or beekeeper; or

that the food is contained in displays, the total space of which equals less than one

hundred cubic feet (100 cu. ft.);

(ix) A farm market that offers for sale at the farm market only one (1) or more of the following:

(a) Fresh unprocessed fruits or vegetables;

(b) Maple syrup, sorghum, or honey that is produced by a maple syrup or sorghum

producer or beekeeper; or

that the food is contained in displays, the total space of which equals less than one

hundred cubic feet (100 cu. ft.) on the premises where the person conducts business at the

farm market;

(x) An establishment that offers only prepackaged foods that are not potentially hazardous as

defined by the State Board of Health; and

(xi) Ice vending machines or kiosks where ice is dispensed in the open air and that are totally self-

contained; and

(3) “Food service industry” means the aggregate of food service establishments.

workshop 3

PLAN. PRODUCE. PROFIT.

WORKSHOP 3: STARTING YOUR FOOD PROCESSING BUSINESS |

March-May, 2015

ARKANSAS FOOD INNOVATION CENTER UNIVERSITY OF ARKANSAS, 2650 N YOUNG AVE., FAYETTEVILLE, AR 72704

Workshop participants will apply knowledge gained from the past two workshops to produce a commercial food product for

our local food systems. This includes hands-on experience throughout the product development process, taking a product

from its concept to selling it in a commercial market with the assistance from food science personnel and full use of the

facilities at Arkansas Food Innovation Center.

FOR MORE INFORMATION or TO REGISTER:

Dr. Renee Threlfall | University of Arkansas

Institute of Food Science & Engineering

479.575.4677 | rthrelf@uark.edu

HTTP://AFIC.UARK.EDU/TRAINING.HTML

Workshop 3 Overview 

Participant Expectations

 Participants must have a firm understanding of their product idea prior to registration

 participants must be able commit 4-8 hours per week on their product

 Participants must be able to supplement additional costs to get their product to market

 Participants Must review materials from Workshop 1 and 2

Workshop 3 Requirements for Participants

 Meet with the Arkansas Food Innovation Center Manager

 Attend mandatory workshop on how to work at the Arkansas Food Innovation Center

 complete product development process, paperwork, and associated costs of production

 Meet with Workshop 3 Product Leader to discuss product (ingredients, processing, packaging, shelf-life, and possible markets)

 Draft Standard Operating Procedures

 Produce test batches to determine taste and shelf life

 Scale to marketable level, package, label and finalize Standard Operating Procedures



1

PLAN. PRODUCE. PROFIT.

Application for WORKSHOP 3: STARTING YOUR FOOD PROCESSING BUSINESS | Due March 1, 2015

ARKANSAS FOOD INNOVATION CENTER UNIVERSITY OF ARKANSAS, 2650 N YOUNG AVE., FAYETTEVILLE, AR 72704

Name: ________________________________ Company/Affiliation: ____________________________

Address: _______________________________ City:____________________ State _________ Zip: ___________

Email: _________________________________ Phone Number: _________________________

Are you interested in this workshop as: Entrepreneur Grower Educator Homemaker Student Other

Do you have a potential product you want to launch in the marketplace? Yes No

If yes, please briefly describe the product. __________________________________________________

Do you have a recipe/formula for a potential product you want to launch in the marketplace? Yes No

If yes, how many ingredients in your product? 1-2 3-5 6-10 11-15 More than 15

If yes, how long does it take to make your product? __________________________________________________

If yes, what is the estimated shelf-life of your product? __________________________________________________

If yes, how does the product need to be stored after production? Shelf-stable Refrigerated Frozen

Mark the types of ingredients in your product. Meat Dairy Grains Fruits Vegetables Herbs/Spices Other

If you checked other, please describe. __________________________________________________

Are there any fresh ingredients in your product? Yes No

If yes, please list each fresh ingredient. __________________________________________________

Does your product contain allergens (milk, fish, crustaceans, shellfish, tree nuts, wheat, peanut or soy)? Yes No

If yes, please list each allergen. __________________________________________________

Mark equipment you might need to produce your product.

None Food Processor Blender Juicer Blancher Oven Kettles Filler Sealer Dryer Other

If you checked other, please describe. __________________________________________________

What type of packaging do you plan to use? Glass jars Metal cans Cardboard Paper Plastic None Other

If you checked other, please describe. __________________________________________________

Mark the methods you would use to produce your product.

Fresh/No Process Frozen Canned Dried Fermented Baked Cooked Other

Can you provide the ingredients for your product? Yes No



2

PLAN. PRODUCE. PROFIT.

Application for WORKSHOP 3: STARTING YOUR FOOD PROCESSING BUSINESS | Due March 1, 2015

ARKANSAS FOOD INNOVATION CENTER UNIVERSITY OF ARKANSAS, 2650 N YOUNG AVE., FAYETTEVILLE, AR 72704

Submit Form to

Dr. Renee Threlfall | University of Arkansas

Institute of Food Science & Engineering

2650 N. Young Ave., Fayetteville, AR 72704

Phone: 479.575.4677 | Fax: 479-575-2165 | Email: rthrelf@uark.edu

HTTP://AFIC.UARK.EDU/TRAINING.HTML

Are you a current or past client of the Arkansas Food Innovation Center? Yes No

In the space below, explain what experience you have in preparing food products. (30 word limit)

In the space below, explain your product and why you want to produce your product. (30 word limit)

In the space below, describe your current process of producing your product? (30 word limit)

In the space below, describe how your product differs from similar products and what is your target market? (30 word limit)

Where do you plan to sell your product? Farmers market Festivals Grocery store Food truck Online Other

If you checked other, please describe. ____________________________________

Do you own your own business? Yes No If yes, do you have a written business plan? Yes No

Do you have a full time job? Yes No

How many hours a week would you commit to this project? 1-3 4-6 7-10 11-15 As much as is needed

When can you work at the Arkansas Food Innovation Center? 6-8 am 8 am -5 pm 5-7 pm Any time

Mark the days of the week that you can work at the Arkansas Food Innovation Center.

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Are you willing/able to pay additional costs associated with developing your product? Yes No

If yes, then how much? $500-999 $1,000-1,999 $2,000-3,999 $4,000-5,999 More then $6,000

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