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Pulp Fixings

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Oregon is below the national average in adding value to crops, but a new center may help farmers change that.

Bill and Karla Chambers think of themselves as farmers, not as symbols of a fundamental shift now taking place in agriculture. But to economists, their 1,500-acre Stahlbush Island Farm near Corvallis is a classic example of value-added agriculture, a trend that is changing the nature of farming in Oregon and across the country.

For the Chambers, it began with a crop of pumpkins. There was a ready market for the pumpkin seeds. But they had to discard the rest of the pumpkin, and that just didn't seem right. So they began to explore how they might use the entire pumpkin, and that led them to build a processing plant on their farm. Then, rather than plowing under tons of pumpkins, they were able to process them into pulp and sell the resulting puree to pie makers. They have become the largest producer of processed frozen pumpkin in the United States.

With the processing plant in place, the Chambers found they could do other things. In addition to pumpkin purees, they now grow and process several varieties of sweet potato, carrot and corn purees; seven other vegetable purees; 10 fruit purees; and a variety of dried products. They sell their products directly to bakeries, baby food companies, soup makers, spice manufacturers and other food and beverage companies. Their customers are located in Japan, Canada, South Korea, Australia, France, Germany and Italy as well as the United States.

Pumpkins in a field.

Photo: Lynn Ketchum

In essence, an economist would point out that the Chambers found a way to increase the net returns they receive for their crops over what they would earn by selling them as they come from the field. In their case, they added value to their pumpkins and other crops through additional processing. There are other ways to add value.

"You can apply the value-added label to any situation where the resulting agricultural product captures a higher net return on the market than it would as a raw farm commodity," explained Jim Cornelius, an Oregon State University Extension economist.

In addition to adding value through post-harvest processing like the Chambers, added value can be achieved by raising high quality crops or animals. Some products command a premium price in the marketplace simply because they are considered to be higher in quality. For instance, people are willing to pay more for the high quality of a microbrewed beer or a vintage Oregon pinot noir. The same holds true for certain varieties of fresh apples and pears, and for free-range chicken.

Woman eating pumpkin puree.

Karla Chambers tastes a puree made from pumpkins she and her husband, Bill, grow on their farm near Corvallis. They sell the high-value product for use in frozen pumpkin pies and other baked goods. Photo: Lynn Ketchum

And niche markets have become a lucrative source of income for some entrepreneurial farmers. Consumers are now willing to pay more for food products with specific attributes. Rancher-owned Oregon Country Beef (profiled in Oregon's Agricultural Progress, Fall 1996) found such a niche for its cattle: consumers who want beef that is low in fat, free of hormones and antibiotics and raised in an environmentally friendly manner.

How significant is the future of value-added processing, an emphasis on quality, and niche marketing for Oregon's agriculture? "There will always be a role for basic wheat production and range-fed cattle," says OSU's Cornelius. "But growers have just about fully exploited this production capacity, so we need to identify other possibilities."

Potential gains to Oregon's agricultural industry by increasing value-added activities are enticing, but they will not occur easily in the competitive global economy. "To be successful at adding value, entrepreneurs must increase net returns, not just the price," Cornelius cautioned. "The challenge is often in controlling the costs associated with additional processing or marketing activities. To do so requires ingenuity, efficiency and the right technology."

Pumpkins in a field.

Photo: Lynn Ketchum

But the possibilities are numerous. Many of the state's important agricultural commodities, such as wheat and beef cattle, still leave Oregon as raw products with little value added. Others, such as the Chambers' pumpkin products, involve relatively minor or overlooked crops. The economic benefit of just a 10 percent increase in value-added agriculture would add about $200 million to state income through increased employment and earnings, according to Cornelius.

This opportunity to gain such a substantial number of new jobs and income lies behind the development of the Food Innovation Center, a value-added food and agriculture complex now under construction next to Albers Mill in Portland.

Although the center has yet to be transformed into reality from blueprints and architectural drawings, it made an early debut at the 83rd annual Northwest Food Processors Convention & Exposition in Portland. The Expo is the largest gathering of food processors and suppliers in the United States, with more than 600 exhibits featuring machinery, products and services.

Dave Lundahl, an OSU food scientist with extensive experience in the food processing industry, will be responsible for the center's sensory research when it opens its doors next December. Between now and then he'll be busy assisting the state's food manufacturers, especially entrepreneurs and small or mid-sized food processors, and acquainting them with the Food Innovation Center.

Man looking at a glass of beer.

The microbrewed beer industry adds value to locally produced hops and barley. Here, Jeff Clawson, the brewmaster at the OSU food processing pilot plant, examines a test brew. Photo: Tom Gentle

He shouldn't have a difficult time making friends for the center. A cooperative effort of the Oregon Department of Agriculture and the OSU Agricultural Experiment Station, the Food Innovation Center has been designed to take advantage of the value-added trend in agriculture. The center will combine the expertise of both agencies in sensory and consumer preference research, food processing and packing technology, overseas marketing and export certification, making it available to farmers, processors and entrepreneurs.

The Food Innovation Center originated in discussions between administrators at ODA and the OSU College of Agricultural Sciences beginning in 1987, recalls Thayne Dutson, dean of the OSU College of Agricultural Sciences.

"We were constantly talking about opportunities to expand Oregon's agricultural sector and how our two organizations could help push things along. It seemed obvious to us that we could make the biggest contribution in the area of value-added. And then Bruce Andrews went to Scotland," said Dutson.

The trip to Scotland occurred in 1989 and Andrews, director of the Oregon Department of Agriculture, remembers it well. The highlight was a visit to the Motherwell Food Innovation Park north of Glasgow. "The park consisted of a Center where university researchers and the Scottish Enterprise Board combined forces with the private sector in the development and marketing of new food products. New food companies were located in the park around the Center," Andrews said.

For Andrews, Motherwell Park crystallized the ideas that Oregon Department of Agriculture and OSU College of Agricultural Sciences officials had been discussing. As a result, the Food Innovation Center, like Motherwell Park, is paired with a privately owned building that will provide office space for agriculture-related businesses. Both buildings are located near the Wheat Marketing Center in Albers Mill. The ultimate aim is to achieve a critical mass of scientists, processors, packagers, and marketers that is strategically located to address Pacific Northwest business, shipping and, most importantly, Pacific Rim commerce.

A sausage pizza.

Oregon's soft white wheat goes into pizza dough, cookies, sponge cake and other valuable products.

Although the Food Innovation Center will focus on new products for new markets anywhere in the world, the countries located around the Pacific Rim are considered to have the most immediate potential for value-added products. Markets for Northwest agricultural products are already developing in Japan, Korea, China, Taiwan, Singapore and Russia. By 2025, demographers estimate, the 10 largest countries in the world will include Indonesia, Malaysia, China, Russia, the United States, Japan, Mexico, and Brazil (the only one that faces the Atlantic--the other two countries listed among the top 10 are India and Bangladesh).

So the first question that the Food Innovation Center will ask is, what attributes of raw, intermediate or finished products would appeal to Asians? "This question was much easier to answer when we were looking only at U.S. markets," said Jim Cornelius. "What works here might not work in Europe or Asia."

Case in point--more than half the wheat in East Asian markets goes into noodles. Unfortunately, the wheat grown in the Pacific Northwest is not suitable for making noodles with the slippery texture and color that Asians prefer. As a result, the Pacific Northwest has lost more than 20 percent of the East Asian market in wheat to the Australians, who have new varieties that create better noodles for that particular market, according to OSU's Lundahl. In order to recapture a share of the market, OSU and the Wheat Marketing Center already are at work identifying wheat varieties that can be made into noodles that meet Asian consumer preferences.

Peas falling into a large bin.

Processing and feezing peas at Hermiston Foods adds value to the crop. Photo: Tom Gentle

Moreover, the Asian market is much more complex than most Americans realize, explained ODA's Bruce Andrews. The taste of a food product, the way it feels in the mouth, the packaging and regulatory requirements differ from one country to the next. "What we need to do is take a new or existing product and tailor it for individual tastes in Tokyo, Beijing, Singapore. That means we have to look constantly at what the market wants," he said.

The emphasis on the marketplace is a distinguishing feature of value-added agriculture. The Chambers, who tailor their product to meet the needs of individual customers, say they don't produce a product until they have it sold. The ranching families who make up Oregon Country Beef regularly visit supermarkets to find out what customers want.

"In the past, we said, 'Let's produce what we know we can produce, then find a market for it.' Now we search for possible markets, then see if we can produce it," said Thayne Dutson.

The Food Innovation Center will offer a variety of services to help Oregon farmers and processors understand Pacific Rim markets, including:

  • A market analysis section to monitor consumer demands and assess the economic potential for value-added food products in Pacific Rim countries.
A pumpkin.

Photo: Lynn Ketchum

  • A sensory testing section to investigate international taste, texture and appearance preferences. "Just because we like something doesn't mean others will," said Lundahl.
  • A packaging design section to provide assistance in identifying important trends in packaging, including such concerns as environmental acceptability, tamper resistance, shelf life and graphic appeal.
  • A marketing research section to conduct cooperative research with both private and public sectors on trade issues facing the agricultural industry.

These new capabilities on the research side will be combined with the Oregon Department of Agriculture's Agricultural Development and Marketing Division, Export Service Center and Analytical Laboratory.

Lundahl already is gearing up to explore potential markets for Oregon farm products. As a starting point, he wants to conduct research on berry and fruit flavor preferences in Pacific Rim countries.

Just consider for a moment the different flavors represented by the berries grown in Oregon, he says. Blueberries, strawberries, marionberries, raspberries, blackberries. Which ones might fit into the taste preferences of various Asian markets? What about cane berries we haven't traditionally grown in the Pacific Northwest, such as lingon berries? Maybe there's a market for them in the Pacific Rim. If so, wouldn't some enterprising Oregon farmer want to grow them?

The possibilities seem endless.

Published in: Innovations, Economics