Penn Soil RC&D Council
RC&D : "The Catalyst for Community Improvement"

Project Concept

Munnell Run Farm Creamery and Commercial Kitchen Incubator

 Introduction

 Across the U.S. we are witnessing the decline of the small family dairy farm as more and more dairy farmers go out of business trying to sell their product in a world commodity market.  Fifteen years worth of data analysis shows that the average price a farmer receives for milk has remained fairly stable at somewhere between $13-14 dollars paid per hundredweight, while the price for all inputs such as labor, fertilizer, seed, feed, fuel, machinery, and overhead expenses has risen dramatically, cutting profits.  In an attempt to remain in business, farmers have tended to adopt the “Get Bigger, or Get out of Business” philosophy, so farm size has increased.  Unfortunately for many, this philosophy is not the answer to making a business profitable.  This philosophy has resulted in the fact that in the period of 1992-2002, the number of dairy farms in the U.S. has dropped from about 158,000 to about 91,000 farms.  Across the country, we are now losing dairy farms at such a high rate that a Cornell University study predicts that if this trend continues, by the year 2020, only about 15,000 dairy farms will remain across the country, and we will have lost a staggering 94% of our family dairy farms nationally.   Closer to home the picture is not much brighter.  In Pennsylvania, the number of dairy farms has declined from 15,096 in 1987 to just 9100 in 2002, a loss of forty percent of these farms over a 15-year period.

 The good news though, is that across the country consumers are rediscovering their interest in purchasing fresher, healthier, locally produced foods and are showing their willingness to pay a premium price to support local farmers producing their own farmstead products.  Northwestern PA still has a viable dairy and small farm presence to take advantage of this emerging consumer market and stabilize local farm based economies with the assistance provided by this project.  The most recent figures available reveal a total of 12,790 farms of all types encompassing 1.7 million acres of farmland within our target area.  These farms provide home to roughly 70,000 dairy cows, producing about 105 million dollars in economic benefits to the regional economy.

 In recognition of all these issues and opportunities, a partnership of local and regional non-profit organizations has emerged with a plan to develop a facility which will provide additional economic opportunities to area farmers and agricultural processing entrepreneurs that will help stabilize family farms and improve the availability of farm fresh products to consumers.  The primary entities committed to this project are The Munnell Run Farm Foundation, The Penn Soil Conservancy Charitable Trust, and the Penn Soil Resource Conservation and Development (RC&D) Council; however, this is a large undertaking that has begun to attract support of many other individuals, organizations, local, state, and federal agencies.  Penn Soil RC&D and the Munnell Run Farm Foundation initiated the development of this project in the year 2005, and are now seeking to forge additional partnerships to make this proposal a reality.

 Executive Summary

 This narrative outlines the concept for the establishment of a dairy processing incubator facility, commercial kitchen, and local foods farm market to improve profitability and economic opportunities for farmers in northwest Pennsylvania.  The planned facility would provide access to food processing equipment, training, refrigerated product storage, and market development.  This facility would be a valuable resource for agricultural entrepreneurs who would like to add value to their farm products to improve the overall economic potential of their farming operations by engaging in direct marketing of their products to consumers. Completion of this facility will allow many regional producers the opportunity to prove that they can successfully produce and market a value added product directly to consumers without the uncertainty and financial pressures normally associated with startup enterprises.  Once the producers are able to demonstrate successful production and marketing to financial advisors and to themselves, they will face an easier time as they develop their own on farm processing capabilities.

 Project Goal

 The goal is to create a Pennsylvania Department of Agriculture (PDA) inspected creamery and commercial kitchen incubator where producers from the local and regional areas can add value to their milk, vegetable and fruit commodities. Dairy producers with small or extra amounts of milk can produce cheese, yogurt, butter or other product, package it, and market it at the incubator or other markets without having the large capital outlay needed to construct a facility of their own. Similarly, vegetable and fruit growers can use the incubator to produce, package and market value-added products such as jams, jellies, sauces, and other products without having the capital investment needed to produce the product in their own facility.

 Needs Assessment

 Several indications exist that there is a real need for such a facility, and that there are in fact, real people in the project area, who would become clients or users of the facility.

 In 2005, The Pennsylvania Association of Sustainable Agriculture (PASA) advertised a three-day cheese-making course to be held at nearby Slippery Rock University and the fifteen available slots were sold out within two weeks. About 80% of the attendees were from the fourteen surrounding counties with the remainder from eastern Ohio. Requests for additional classes continued to be received, and Penn Soil RC&D sponsored a second three day cheese making course held on August 24-26, 2006 in Mercer County.  Again, the class was full with one third of those students originating from the project area.  In the last month, PASA sponsored a one day cheese making course in two Pennsylvania locations (one within this project area) and the classes were attended by 90 people confirming a growing interest in cheese making at home or on the farm.

 At the same time, the PA Keystone Kitchen Incubator Feasibility Study, a joint effort of Penn State Extension and the Pennsylvania Technical Assistance Program, identified approximately 15-20 individuals in the project area who were potential users of the incubator facility.  These results have led to further collaboration and discussion between the Pennsylvania Technical Assistance Program and the principals of this project on co-sponsoring additional regional educational programs to promote the economic potential of value added farming and awareness of the Munnell Run Farm Incubator Project.

 A facility at Munnell Run Farm would be able to serve small producers in northwest Pennsylvania through classes and apprenticeships. As a producer gains experience and capital through the use of the incubator he or she can develop a facility at his or her farm or lead the way in developing a similar facility elsewhere in the region. In this way, small-scale agriculture will be supported and sustained in northwestern Pennsylvania. In addition, the consumers’ choices in buying fresh local food products will be expanded, generating regional economic benefits.

 To help us to establish the value-added agriculture kitchen we will build a new coalition composed of both farmers and “eaters” as associate members of the Munnell Run Farm Foundation. With this coalition we will create a business plan and embark on a “buy local” campaign. The campaign will include field days to bring local producers together with consumers to educate both sectors on the human and environmental benefits of small-scale agriculture as well as the economics of local food production. This project involves partnering with the Pennsylvania Association for Sustainable Agriculture, Pennsylvania State Technical Assistance Program, Penn State Extension,  Munnell Run Farm Foundation, Penn Soil Conservancy Charitable Trust, the Penn Soil Resource Conservation and Development (RC&D) Council, and other partners.

 Work Plan and Resource Requirements

 The preliminary budget for the Munnell Run Farm Incubator project is as follows:

Architectural & Engineering Design                                                       $ 25,000

Dairy processing & Commercial Kitchen Equipment                           $150,000

Building Construction Renovations & Infrastructure                              $350,000

Incubator Facility Staffing & Training Providers (two years)                 $120,000

Incubator Facility Operation Expenses (two years).                              $  30,000

Project Administrative Expense                                                              $  10,000

                                                                                                                    $685,000

Expected Results

The Munnell Run Farm incubator will have a positive impact on the economy of Mercer County and the surrounding region.  The production of farm-based cheese, yogurt, and other dairy products as well as jams, jellies, fruit drinks and other products made from fruit and vegetables has proven successful in eastern Pennsylvania, Maryland, New York, Vermont, Rhode Island, and Ohio. A growing market exists for locally and organically produced foods, particularly in the Pittsburgh area. However, western Pennsylvania is devoid of any farmer operated processing facilities. Sales of organic dairy products are increasing at the rate of twenty percent per year, even though a gallon of organic milk typically sells for more than twice the price of regular milk.  Value added dairy farmers are successfully converting milk worth $13-14 dollars per hundredweight into farmstead cheeses, yogurt, butter, ice cream, and other products worth many times more. 

The project will generate additional revenue from agriculture in the region. The project will help to keep food dollars in the local economy while sustaining the small farm operation.

 Incubator Concept Sustainability

 It is the goal of the sponsors committed to this project that this incubator facility become self supported by the end of the initial two year project period.  It is understood that the demand on the facility may not be such that the facility will be in constant use on a daily basis, at least initially. Preliminary discussions about the viability of the incubator concept have led the primary sponsors to conclude that the incubator facility will need to serve three different functions to be sustainable and justify the substantial investment required.

 First, the incubator will serve its designated function of providing opportunities for agricultural entrepreneurs to develop and produce value added products for sale to local and regional markets.  The facility will provide access not only to the necessary processing equipment, but also to educational training, product development, and oversight from trained staff to produce a high quality product for consumer markets.  Entrepreneurs would have access to a low cost facility which could meet their needs without a large initial investment of their own to begin processing.  They would be able to spend more of their resources in developing markets while using the incubator facility at a low cost.  As their markets expanded their need for production and they became less dependent on the incubator staff for oversight, they would graduate to renting processing time in the incubator, or to developing their own on-farm facility 

 Second, the facility will be used as a teaching facility for regular scheduled teaching classes such as the three day cheese making classes sponsored by Penn Soil RC&D and Pennsylvania Association for Sustainable Agriculture.  It is anticipated that this facility could provide regular programming for educational needs of people interested in value added processing even from far beyond our anticipated service area.  As an example, the August 2006 cheese making class sponsored by Penn Soil RC&D attracted students from four states and Canada.  Clearly there is a need for more hands on type educational training that is not being met over a large area of the U.S.  This facility would serve that need and would host regular training events.  These training events would contribute income to support the overhead of the incubator facility.

 The third and final function for the facility would be to continually produce at least one local product of its own to provide cost efficiency to the facility in justifying and maintaining permanent staffing and equipment availability for the entrepreneurial development program.  After much discussion, the local sponsors have decided to focus on a continuous production of local yogurt to start with.  After discussion with two dairy processing consultants, it is the opinion of the local sponsors that this product is the one that can be produced most efficiently with the least waste produced.  It is also felt that there is a local market for the product and this would jumpstart the concept of the local farm market at Munnell Run Farm.  This continuous production of yogurt would again provide income to the incubator facility to make it a sustainable operation. 

 Primary Project Manager Information

 The primary Project Manager is Mr. James Mondok, President of the Munnell Run Farm Foundation, Inc. at 747 Greenville Road; Mercer, PA 16137-5023.  Mr. Mondok can be reached by telephone at (724) 662-2242 or via email at jim@munnellrunfarm.org.