Improving Illinois Farm Incomes and Rural Communities through Specialty Farm Products & Value-Added Agriculture 

The Value Project

Project Summary

The Value Project seeks to improve farm income and rural communities in Illinois through the expansion of specialty farm products and value-added agriculture.  The Project’s approach is unique within the research community.  First, it is interdisciplinary, involving scientists from agricultural economics, agricultural engineering, agricultural and extension education, animal science, crop science, economics, geography, and rural sociology.  Second, the project is inter-institutional, including Western Illinois University (WIU), the University of Illinois at Urbana-Champaign (UIUC), and University of Illinois (UI) Extension.  Even more unique, the Project is problem oriented, systems-based, and utilizes different research methodologies (surveys, case studies, on-farm trials, and participant observation). 

Another important feature of the Value Project is its seamless integration of research and extension activities, with extension team members playing an active role in both data collection and the dissemination of research findings.  The Project utilizes a combination of conferences, field days, extension meetings, publications, mass media (radio, TV, and newspaper), the Internet, and locally organized leadership teams to disseminate research findings.  Finally, the Value Project is farmer-centered and demand-driven.  A diverse statewide Project Advisory Committee provides overall guidance, while local leadership teams provide direction and input within each target area of the project. 

The problem addressed by the Value Project is low farm income and its impact on rural communities.  To address this problem, the team conducts just-in-time research and extension activities to assist Illinois farmers in taking advantage of new and emerging specialty crop and livestock opportunities, as well as to assist them in organizing into groups, such as producer alliances, to improve their prospects for capturing new export and value-added processing opportunities.  To carry out this innovative project, the Value Project is organized into five components.

Marketing

The primary focus is on identifying elevators and river terminals that handle different types of specialty crops, including volume, premiums paid, handling costs, and marketing channels. During January 1999, a survey determined that nearly 300 of 1,100 Illinois facilities handled specialty crops.  A follow-up study in January 2000 found that 425 firms plan to handle specialty and non-GMO crops during 2000, or a 40% increase in one year. Within a month of data collection, this information has been made available to farmers through a searchable database at the Value Project website and in a printed directory. 

Specialty Crops Technologies

This component has focused on developing fact sheets for different types of specialty corn and soybeans, and on conducting on-farm trials to assess “yield drag” and other factors affecting the profitability of different specialty crops.  To date, 14 fact sheets have been completed and published in a booklet, with 14,000 copies already distributed to farmers. Another 6 fact sheets were completed in February 2000.  All fact sheets are available at the Project’s web site (http://web.aces.uiuc.edu/value/), which includes partial budget analysis calculators that farmers can use to determine the relative profitability of specialty crops in comparison with their conventional crops.  The Project’s website receives more than 2,000 hits/month.

During the 1999 growing season, 19 on-farm trials were carried out in western and central Illinois.  The results of these trials are also available at the web site and have been printed for distribution and presentation during winter extension meetings.  The cropping systems team is planning to expand this on-farm research program to approximately 40 sites across most of Illinois during the 2000 growing season.

Pilot Projects

During the first year, the project focused on three target areas in the lower Illinois River basin.  In the current year, it targets multi-county areas in the northern and eastern parts of the state.  In implementing these pilot projects, the team conducts baseline studies to determine the extent of specialty crop production and the types of farmers producing specialty crops (the team has collected detailed data for more than 2,000 farmers in 11 counties).  After analyzing these data, the project team—in collaboration with local farm organizations and agribusinesses—organizes different types of extension activities, including one or more value-added conferences in each project area, to inform and stimulate farmer interest in specialty crop production and value-added processing.  During the past 12 months, the project has organized 7 value-added conferences with about 625 participants, made more than 50 presentations to different farm groups throughout the state, contributed to numerous newspaper and magazine articles, and produced radio interviews carried on approximately 75 Illinois radio stations, which reached a confirmed audience of 1 million listeners.

Another aspect of the pilot projects is the development of a strategic plan for expanding specialty corn and soybean production in each pilot project area.  Part of this strategic plan is to determine whether some type of value-added processing is feasible, either as a “new generation cooperative” or through a “strategic alliance” with an existing firm.  The project has been involved with local groups in 20 counties involving more than 250 local agricultural leaders.

Group Action Institutions¹

At the outset of this project, relatively little systematic information was available in Illinois about New Generation Cooperatives (NGCs) that are popular in other Midwestern states.  First, an extensive 800-entry bibliography on New Generation Cooperatives was compiled to provide access to current research about these ventures.  Second, the project developed an extensive directory of NGCs, with information organized by type of value-added enterprise.  Third, an edited book, to be published later this year by Quorum Books, has been compiled with chapters by leading researchers on NGCs.  Fourth, ten case studies on NGCs have been prepared and distributed on the Internet (see: http://www.iira.org/cfar/) and in paper format to help Illinois farm groups evaluate factors affecting value-added business ventures.  Finally, a survey of local economic development agencies was conducted to determine whether active involvement by farm groups influence these agencies to participate in value-added business ventures.

To disseminate these findings, two one-day seminars, involving about 275 participants and speakers from several NGCs, were held in Macomb and Collinsville.  Several county groups participated and decided to pursue value-added strategies.  For example, the McDonough County Ag Coalition (now called Prairie Premium Ag Coalition or PPAC) formed, and is now investigating the feasibility of a producer-owned dairy operation, a soybean crushing operation, identify-preserved (IP) grain and other ventures.  This group raised more than $20,000 in start-up capital to establish an information network and to conduct feasibility studies.  The project team is also working with six southwestern Illinois counties (Omni Venture, Inc.) and with Crawford County in southeastern Illinois (Agricultural Development Association) to help them organize and evaluate these types of options. 

Specialty Livestock  

This newest component of the Value Project was initiated in August 1999.  The first task was to investigate small and medium-scale slaughter and processing firms to determine their capacity and whether they process any type(s) of specialty livestock.  In addition, information was collected on how these plants would implement the HACCP regulations (food safety) that went into effect in January 2000.  Approximately 90% of the 125 “type 1” Illinois firms that slaughter and/or process livestock have been surveyed through a telephone interview.   A directory of livestock processing firms is being prepared, including those firms that process both specialty livestock and/or branded products (e.g. certified Angus). 

The project is also working with specialty livestock marketing firms, such as Niman Ranch, to identify the production requirements for high-end specialty meat markets.  The specialty livestock component is holding a Specialty Livestock Conference in Freeport on February 15, 2000, and a “free-range poultry” training course in Carbondale on February 28, 2000.  Specialty livestock appear to be best suited for small to medium-scale farmers in the northern, western and southern parts of the state that wish to take advantage of high-value niche and ethnic markets in Chicago and St. Louis.

Statement of Impact

Research Impacts  

As noted earlier, the project team has already produced an extensive bibliography, a national directory, an edited book and 10 case studies on New Generation Cooperatives (NGCs).  These research activities will be consolidated and further disseminated during the coming year as the project seeks to apply these findings in the creation of new producers alliances and NGCs within the state.  In addition, the team presented refereed research papers during 1999 at the meetings of the Rural Sociology Society (Will Farmers Organize: Structural Change and Loss of Control over Production) and the National Agricultural Education Research Conference (Assessing Farmers’ Interests and Needs for Specialty Corn and Soybean Information in the Lower Illinois River Basin).  Two additional papers (Producer Alliances: A Collective Solution to the Industrialization of Agriculture, and the Privatization of Information) have been submitted for presentation at the World Congress of Rural Sociology in July-August 2000.  In addition to these scientific contributions, the project generated to date 6 research reports and numerous technical papers; four additional research reports are currently being prepared.

Economic Impacts 

Based on 1999 Illinois grain handlers’ estimates of current trends, the volume of specialty corn is projected to expand from about 81.5 million bushels in 1998 to approximately 350 million bushels by 2005.  The same survey projected that specialty soybeans would expand from about 19 million bushels in 1998 to approximately 88 million bushels in 2005.  Excluding the value of specialty corn and soybeans grown in 1998, it is projected that the expanded production of specialty corn and soybeans would result in $79 million in additional income for Illinois farmers for the 7-year period starting in 1999 through 2005.  A figure showing the additional farm income accruing from specialty corn and soybeans for each year during this period follows².

If Illinois farmers are to capture this additional farm income, a collaborative effort on the part of many groups will be required, involving commodity organizations, producers alliances, new generation cooperatives, other farm organizations, the Illinois Department of Agriculture and the Value Project. 

In recognizing the efforts that the Value Project has already made in contributing to this goal, Ron Warfield, President of the Illinois Farm Bureau, nominated the Value Project Team for the C-FAR Research Team Achievement Award.  In his nomination letter, Warfield said “The Value Team is helping Illinois farmers to first identify these [specialty crop] markets and then providing them with the necessary information so they can successfully produce these crops.  With the exception of high oil corn, more than 90% of Illinois farmers report having little or no information on these different specialty crops.  The Value Team is bridging this knowledge gap by publishing fact sheets on nearly every type of specialty corn and soybeans that can be grown in Illinois.”  In addition, he said: “the Value Team is working with local leadership teams in different target areas within the state to develop a strategic plan to improve farm income.”

Social Capital Impacts  

Producer alliances (PAs) and new generation cooperatives (NGCs) will help improve information flow about new marketing opportunities and technologies to farmers producing specialty farm products.  These organizations will also improve the competitive position of farmer members in negotiating contracts with both domestic processors and exporting firms.  Finally, NGCs are expected to be the mechanism for establishing value-added processing opportunities in local communities.  These collective ventures will strengthen local communities by creating jobs, generating new income streams, and increasing the tax base to support community institutions.  Examples of two new producer alliances that are a direct result of the Value Project include:

(PPAC - formerly the McDonough County Agricultural Coalition) was established by the WIU Value Team during 1999 and, as noted earlier, is investigating the feasibility of several different value-added opportunities.  In addition, they have set up an information network to alert members of specialty crop premiums and contracts at different elevators within the region.  Last fall, PPAC members took advantage of this network to sell about 250,000 bushels of specialty and non-GMO corn and soybeans, with premiums ranging from 17¢ to 40¢/Bu.  Because of this network, one member increased his income by more than $6,000.

·    The Central Illinois Grain Alliance (CIGA) was a direct outcome of the first pilot project in Woodford County.  CIGA was established to pursue new marketing arrangements and/or partnerships with domestic processors and foreign export markets by producing and marketing identity- preserved (IP) crops with specific traits.  In December 1998, CIGA shipped 5 different types of yellow food-grade corn to Mexico (train car size samples).  The Mexican processor found one locally grown hybrid that was well suited for its local market.  In early 1999 CIGA contracted with this firm to produce and deliver 175,000 bushels of this selected hybrid, with growers receiving a 20¢/bu premium.  If the Mexican processor is satisfied with this larger shipment, CIGA plans to contract, produce, and ship a larger volume in 2000 (possibly up to 1 million bushels).

Professional, Programmatic, and Institutional Impacts

Although the Value Project has been operational for only 16 months, the project and its staff are already receiving recognition.  First, the College of Agricultural, Consumer and Environmental Sciences (ACES) at the UIUC selected the project as one of 11 research success stories in the College; the Office of Research prepared a four-color brochure to highlight the project’s achievements.  Second, the presidents of both the Illinois Farm Bureau and the Illinois Corn Marketing Board nominated the Value Team for the C-FAR Achievement Award. 

In summing up his nomination of the Value Team for the C-FAR Achievement Award, John Adams, Chairman of the Illinois Corn Marketing Board, said in his December 27, 1999 letter: “…the Value Team has carried out research on a significant and complex set of problems of direct importance to Illinois farmers.  Through publications, value-added conferences, field days, extension meetings, and their unique web site, they are transferring these findings to farmers throughout the state in a comprehensive and timely manner….  The Value Team has set the standard for how a complex research problem should be undertaken and deserves to be recognized for this outstanding team effort by receiving the C-FAR Achievement Award.”

In addition, two project members, Pete Fandel and Elaine Smillie, have already been recognized by their extension peers for their work on the Value Project by the receipt of two awards for program “innovation” and “vision.”  The Illinois Farm Bureau also recognized Pete Fandel in December as an outstanding young leader in agriculture due to his C-FAR Project efforts.  Finally, UI Extension has incorporated the Value Project into its on-going program of work and temporarily assigned a staff member to the project team (Linda Eilks) to expedite project activities.  In addition, many cropping system and agricultural educators within UI Extension are directly involved in Value Project activities.  In addition, the on-campus research team has conducted several in-service education programs for all cropping system educators, including the distribution of teaching materials, so that the primary responsibility for disseminating this information has been devolved to the extension field staff.

Leveraged Funds  

The in-kind contribution of the University of Illinois to the Value Project was estimated to exceed $320,000 in 1999, including about $225,000/year in contributed salary and benefits, plus $95,000 in indirect cost recovery (ICR).  Western Illinois University estimates that its 1999 in-kind matching funds for the Value project exceeded $ 100,000.  Therefore, during 1999, the combined in-kind contribution of the UIUC and WIU exceeded $ 400,000.  Given the expansion of the project into other parts of the state during 2000, the amount of leveraged funds is expected to substantially increase.

Future Directions

Contributions to Science 

Scientific progress takes place through the melding of different types of studies and observations, and from applying a variety of perspectives in analyzing data.  The Value Project has collected a diverse array of data, ranging from surveys to secondary data, and from detailed case studies to inter-county replications.  The information obtained from this data-collection effort serves three purposes:  (1) to provide a benchmark for future impact assessments of project activities, (2) to create a baseline for county-level program development, and (3) to provide an extensive data set for exploring more theoretical and analytical research issues.  The intersection of these different purposes will enable the Value Project to make important scientific contributions at both the applied (operational) and theoretical levels. 

In the initial stages of the Project, scientific contributions revolved around the discovery of "what exists" by documenting (1) farmers' level of exposure, knowledge, and interest in specialty crops; (2) their willingness to engage in collective ventures; (3) their interest in investing in "downstream" value-added activities; and (4) their views on broader structural trends in agriculture.  Much of the information collected to date has been used to serve very pragmatic ends.  For example, these data have been used to identify and monitor changes in specialty crop and livestock markets, establish how much farmers know about specialty crops, and their demand for additional information.  These data have been used in creating county level profiles of farmers, shaping the format of conferences and determining the content of applied publications.  Through time, county-level profiles have been aggregated into eco-regional analyses that have helped determine whether to proceed with efforts to attract processing firms to specific localities.

Given the database being assembled as the project expands into new areas, analytical and theoretical research will become both feasible and a higher priority.  The research team plans to address broader macro-structural trends in agriculture—issues related to the industrialization of agriculture, formation of collective institutions among producers, and the availability and access of farmers to information, markets and other resources. In one way or another, much of the ongoing research will focus on these concerns. 

For example, the project team wants to empirically test whether a paradigm shift has occurred concerning the diffusion model of technology transfer.  Some of the issues being studied are (1) the changing communication patterns among farmers themselves, (2) communication between farmers and specific sources of technical information (point-to-point transfer of technology rather than diffusion), and (3) the privatization of information.  Research will address issues such as whether farmers are willing to share or diffuse knowledge, or do they increasingly view knowledge as proprietary?  Observed changes in pilot project data suggest that a new technology transfer strategy may be needed for greater numbers of farmers to participate and benefit from value-added opportunities.  Another factor being investigated is the relative significance of management skills, resources, and other factors in the adoption of specialty crop technology.  These examples illustrate the type of research issues to be pursued during the remaining 3.5 years of the project.  The answers to these topical research questions will represent important scientific contributions.

The Intervention Strategy: Developing Strategic Plans for Different Eco-Regions within Illinois  

During the first year of the project, pilot projects focused on individual counties as the unit of analysis in developing farmer profiles (typologies of farmers who are currently producing, interested, uncertain or not interested in producing specialty farm products).  They have also focused on assessing farm-level and regional resources (e.g. on-farm grain storage, transportation infrastructure, markets for specialty farm products, existing grain and livestock processing capacity, and so forth) and, through on-farm trials, determining whether agronomic conditions in different counties are suitable for various types of specialty crops.  A problem identified in implementing the first three pilot projects is that a county is an inappropriate unit of analysis when developing a strategic plan for the development of specialty farm products and value-added processing.  Instead, the project team is now focusing on eco-regions and eco-zones that reflect different agronomic conditions, farming systems, markets, and infrastructure resources—factors that help determine in large part which specialty farm products will be economically feasible within different parts of the state.

The shift in focus is illustrated in recent experience. In spatially analyzing the farm survey data from 6 counties in northern Illinois³, it was observed that the primary area for growing clear hilum (tofu) soybeans was in an eco-zone encompassing most of DeKalb County, but also including the eastern half of Ogle and Lee counties, the western part of Kane County and the northern part of LaSalle County.  The specialty crop marketing study reflected this same pattern.  In the same survey, producers were asked how much they would be willing to invest in a soybean processing plant if they had delivery rights under the framework of a NGC.  Again, by spatially analyzing the location of the 255 farmers (through the use of their zip codes) who indicated that they were willing to collectively invest $2 million in a processing plant, it was determined that the majority lived within this same eco-zone.  If these respondents are representative of other farmers within this target area, it can be assumed that there would be about 750 farmers in this eco-zone who would be willing to invest about $6 million in such a value-added processing facility. 

In addition, upon examining the transportation infrastructure in this same eco-zone, it became apparent that a very favorable rail and interstate road corridor exists between DeKalb and Rochelle that would be an obvious location to consider in building such a facility (assuming that a Japanese partner could be identified).  After these data were presented at a Specialty Crops Value-added Conference in Rockford in early February, the president of the DeKalb Chamber of Commerce has taken the leadership in organizing a meeting to discuss these findings in more detail with the DeKalb County Economic Corporation, the DeKalb County Farm Bureau, and other interested stakeholder groups.

In western Illinois, the project plans to consolidate and expand on its Year One activities by surveying farmers in the remainder of the counties within the Two Rivers eco-region of western Illinois.  In his recent budget message the Governor allocated $3 million for FY 01 to assist NGCs in establishing value-added enterprises.  The project plans to develop an overall strategic plan for this eco-region, while working closely with farmer organizations throughout this area, especially the PPAC, centered in McDonough County, and the Ursa Farm Cooperative, centered in Adams County.  The project will assist these groups in expanding their access to specialty crop and livestock markets and in developing plans for value-added processing that might be funded from this new state-wide initiative.  The same approach will be followed to provide organizations in other eco-regions of the state the opportunity to position themselves for state funding.  There are obvious benefits to linking nascent organized ventures with state policy initiatives.  However, this expanded activity will require that additional research funding be secured under the C-FAR Special Research Initiative.

The Specific Research Agenda  

In implementing the project goals and objectives outlined above, the Value Team plans to carry out an ambitious research-outreach program during the next 3.5 years of the project.  These plans will be outlined briefly by component.

The marketing team will up date the specialty corn and soybean market database annually, to (1) measure the dynamics of these system changes, (2) share relevant market, price, premium, cost, and related information with farmers through the project’s website and through printed directories and research reports, and (3) construct a longitudinal database that will document these changes and the overall impact of specialty crops on the Illinois farm economy.  In addition, the team will utilize these data in developing a comprehensive marketing channel profile for each specialty crop, including its origin, volume, storage and handling costs, transportation, final destination, and end-use.

·   Specialty Crop Technologies.  

·    Pilot Projects. 

Southern Illinois is the most economically depressed area within the state and represents the greatest challenge in terms of improving farm incomes and rural communities.  Based on the marketing study, it is apparent that specialty crops have less potential in this eco-region, due to its lighter soils that are more sensitive to weather constraints.  The basic strategy to be followed in southern Illinois is to focus on sustainable crop and livestock systems that can target emerging, higher-value niche markets.  The same basic strategy will be followed in specific eco-zones within western (e.g. Fulton County) and northwestern Illinois.  Therefore, expanding the specialty livestock research component (see below) will be critical in implementing this strategy.

·    Group Action Institutions.

The first step in getting these PAs/NGCs established is to engage a local leadership team in a series of visioning sessions.  Next, the team would help each group in identifying markets and developing a marketing plan.  Where needed, the team would help these groups solve specific management issues.  Next, they would assist these groups in carrying out feasibility studies and business plans for potential value-added enterprises.  As PAs and NGCs are established, they will begin having a positive economic impact on the surrounding community.  Therefore, the team will estimate these economic impacts through traditional input-output or impact analyses.

·    Specialty Livestock.  

Project Evaluation  

Project impacts will be measured during the fifth year of the project by measuring changes in the production and marketing of specialty farm products and their impact on farm income (year 1 vs. year 5 comparisons).  For example, the research team has developed excellent baseline data on farmer knowledge about producing specialty farm products, as well as baseline marketing data on the volume of each specialty crop being produced, premiums received, and the destination of these crops. In addition, at the outset of the project the team assessed the status of producer alliances and NGCs within the state and will be able to systematically measure these social capital impacts during year five, as well as assess the economic impact of new value-added enterprises on local communities.  These examples are illustrative of the types of analyses to be used in evaluating project impacts.

Project Constraints  

The University of Illinois and stakeholder groups have already recognized the Value Project as an innovative and outstanding research-extension program.  As John Adams, Chair of the Illinois Corn Marketing Board, said in his letter nominating the Value Team for the C-FAR Achievement Award, “The Value Team has set the standard for how a complex research project should be undertaken…” In planning the original research project, the team planned to work in only 5 pilot project areas (counties) during the entire 5-year project.  By the beginning of the second year, it became clear that the basic approach was working as planned and that an eco-regional approach was needed.  This change to an eco-regional approach requires a major project expansion both in the magnitude of research and outreach activities to be carried out.  Because of the depressed Illinois farm economy, the Value Team is prepared to move forward on this expanded research and outreach agenda as soon as possible to improve farm profitability and the viability of rural communities—the overall project goals.  However, to refocus on this broader research-outreach agenda will require additional resources.  Moreover, increased resources would also allow the team to more systematically address the research issues identified earlier under the Contributions to Science section, the other major research goal of the project.  In short, without increased resources, the team will be forced to choose between an expanded outreach agenda that would emphasize improving farm incomes and rural communities, or scaling back these efforts to emphasize the project’s contributions to science.  Given the necessary resources, the team can do both.

Most Value Team members carry out research-outreach activities as an in-kind contribution to the project.  Those team members who receive direct salary support from project funds are identified either as a percent time or as a specific time period, such as one month of summer salary, during FY 00.  As noted earlier, the WIU, UIUC, and UI Extension in-kind contributions this past year exceeded $400,000 and will likely exceed $500,000 during the coming year.

Value Project Direction: 

• Burton E. Swanson, Project Director and Team Leader (1 month) 
• Mohamed Samy, Project Analyst (100%)
• Linda Eilks, UI Extension.

Specialty Crop Marketing: 

• Darrel Good, Research Leader (1 month)
• Karen Bender, Senior Research Assistant (1 month).

Specialty Crop Technology:  

• Emerson Nafziger, Research Leader, 
• Rita Frerichs, Research Assistant (50%)
• Michael Roegge, and UI Extension, On-farm Trial Coordinator.  

UI Extension On-farm Trial Collaborators: 

• Aaron Duffelmeier, Morgan County
• Bill Brink and Matt Montgomery, Sangamon County
• Pete Fandel, Woodford County 
• Marion Shier, Livingston County 
• Trent Torrance, McDonough County 
• Dido Kotile, Macomb Extension Center 
• John Fulton, Logan County 
• Bob Harris, Moultrie/Douglas Counties 
• Gary Letterly, Christian County.

Group Action Institutions (WIU Team):  

• Norman Walzer, Research Leader (1 month) 
• Christopher D. Merrett, Lead Researcher (1 month) 
• Mary Holmes, Outreach Specialist (50%).