Grow it here: Demand for local goods helping agriculture


By Jeff Keeling

It’s 8:30 on a crisp, late February morning. Under a brilliant blue sky, large fans hum gently, competing with the chirping of songbirds in the middle of a 250-acre tract of land in rural Stanley Valley, Hawkins County, Tennessee.

In a four-acre section of land sit 40 greenhouses covering 4,320 square feet each. Inside the warm, humid houses, hanging from the ceilings and on platforms several feet off the ground, rows of potted plants sit in ranks of brilliant green, punctuated by occasional sections filled with colorful flowers. Not hundreds of plants, nor even thousands, but tens if not hundreds of thousands.

Within weeks, much of the product will roll down the roads en route to the nation’s 36th-largest grocery chain (Food City), which sources all of its bedding plants for landscaping and vegetable gardening, as well as its hanging baskets, from here.

The scene is bucolic, with the ridge just to the north separating Stanley Valley from Caney Valley. This is where, more than 50 years ago, irritated at the rising cost of tomato plants that were going into his row crops, Hollis Lafollette built a greenhouse.

Here at Lafollette Farms, where Harvey Lafollette, 49, has built upon the business started by his father and grandfather (both named Hollis). Food City honored Lafollette as its Wayne Scott Memorial Grower of the Year last month. For Food City CEO Steve Smith’s money, Lafollette represents the best of what has become a $5 million-plus piece of Food City’s business since the company began its local purchasing program about a decade ago.

To grasp the economic magnitude of agriculture in the greater Tri-Cities, take that Food City produce program and multiply it numerous times, thanks to a variety of sourcing programs from farmers markets and “farm-to-table” restaurants to seven-figure operations like Appalachian Harvest in Duffield, Va. Then broaden beyond just produce, to tobacco, commodities and livestock – Greene and Washington counties in Tennessee rank 1st and 6th for cattle production statewide – and it’s clear that agriculture is a major feature on the greater Tri-Cities economic landscape.

With national Ag Week set for March 23-29, The Business Journal tilled just a sliver of the fertile ground that is agribusiness circa 2014, talking with several farmers, people in the distribution/purchasing system, and a banker. We found an industry blooming with innovation. That innovation, and some fortunate trends, have helped stem a slump in farming that reached its low point around 2006, when tobacco prices bottomed out and the residential housing boom was at full throttle.

“Farming houses” and tobacco’s demise –
the leanest years
The housing bubble and changes in tobacco hit regional farmers hard. In places closer to urban centers, it was a double whammy, says Roy Settle, vice president of agricultural lending at First Bank and Trust. “When the housing boom was really going, that was putting a lot of pressure on. People were thinking, ‘I don’t have tobacco, and they’re offering this much for land,’ and places kind of sold out then.”

Farmer Tony Slaughter, a client of Settle’s, remembers it well. “In ’06 was the mass exodus from tobacco,” he says. “That’s when everybody left, because the prices were terrible, prices that we hadn’t seen in decades. You can’t produce a crop under those conditions. You have to have an alternative or shift your focus. Fortunately I had livestock and I’m somewhat diversified, so I could do something else.”

In the region’s more remote sections, small farmers were primarily dealing with the after effects of the tobacco buyout authorized by Congress in 2004. A few years earlier, Abingdon, Va.-based Appalachian Sustainable Development had begun working with farmers, mostly in Southwest Virginia, on transitioning from tobacco to organic produce. ASD’s “Appalachian Harvest” program worked to provide tobacco farmers who had lost price supports with training, infrastructure, markets and distribution for certified organic products.

Robin Robbins, Appalachian Harvest’s general manager, believes the program – which added conventional produce in 2008 – has helped numerous families stay in agriculture during a difficult transition.

“I feel like it has been the difference in them being able to have a business model,” Robbins says. “They can possibly do a handful of direct markets, but in remote Appalachia you wouldn’t have the opportunity to sell $1.5 million (AH’s 2013 gross sales).”

Those sales grew from $162,395 in 2002 to $450,296 in 2007, the year before ASD opted to broaden its scope to include farmers using conventional methods. During that same period, Food City’s local sourcing had increased from $1.25 million (2002) to $3.9 million. Food City CEO Steve Smith and Director of Produce and Floral Operations Mike Tipton echo Robbins with respect to the feeling they get from knowing they’re helping keep farming viable.

“It’s really refreshing and gratifying to our team at Food City to be able to partner with local farmers that have had farming in their family for literally generations, to be able to give them an alternative crop to tobacco to be able to keep that family farm,” Smith says.

Last year, with the Black Mountain, N.C.-based Ingle’s supermarket chain as its largest customer, Appalachian Harvest’s sales reached nearly $1.5 million. A 15,000-square-foot warehouse in Duffield, Va. serves as the operation’s nerve center. Robbins says AH provides farmers working as little as a half-acre with two primary benefits: logistical scale and technical assistance, including regulatory training. Product is aggregated in Duffield to match supply with demand, and a strong relationship with the Virginia Cooperative Extension helps make meeting training and regulatory requirements cost-effective for even the smallest farmer.

Somewhat like small banks, small farmers have to deal with regulatory requirements that can make continuing in business hardly seem worth the effort. AH steps in with grants for training courses and other ways to make it easier without cutting corners.

“The integrity of food safety we understand,” Robbins says. “But if you were a farmer and you were only going to make $2,000 and your audit was going to cost you $2,000, why would you bother?”

Combine that with the ability of a farmer producing just a few boxes of product to have it aggregated at the warehouse for a large-scale order, and AH’s model for keeping the little farmers in business starts to make sense. A recent study for AH showed that without their suite of services – for which they take 20 percent of gross sales – their client farmers may have been able to market just $329,000 last year, not the $1,495,000 they managed.

“The small scale farmers would be pretty much non-existent in our area if they didn’t have the luxury of being able to put their 10 boxes with two or three other large farmers’ hundreds of boxes,” Robbins says.

Microcosm in a four-inch pot: Agriculture’s resurgence spreading
Farming isn’t easy even in the best of times.

“A lot of times it’s a seven-day-a-week job,” Lafollette says, four-inch pots receding behind him inside one of his greenhouses. “After you work five days, these plants, if the sun’s out and it’s good and warm, they’re going to have to be watered and fed on the weekends, too. You can’t just walk out and then come back Monday morning.”

A week later and 19 miles away as the crow flies, Slaughter takes a few minutes to reflect on farming. Sows and piglets grunt in a building behind him, sheep bleat in a pen next to a trailer loaded with baled tobacco, and chickens scratch the cold, damp ground under a gray sky threatening another blast of winter.

While he can check the Internet regularly and pursue innovative marketing approaches, Slaughter says in some ways farming hasn’t changed much since his great-uncle worked land between Gray and Kingsport 70 years ago.

“I do some things a lot easier,” says Slaughter, who has farmed full time since 1980. “We round bale hay instead of square baling or putting it up loose. We shell corn with a combine and so forth.” He works more than 1,100 acres, most of it leased, producing a diverse mix of livestock, as well as tobacco.

“But he grew tobacco, I grow tobacco. It’s virtually no change in that aspect of it. It’s still hand labor. Feeding sows and pigs is still hand labor. The production of hogs has changed virtually none over the past century. In a sense, perhaps you could turn back the clock from 2014 to 50 years ago and very few things would be different.”

Enter produce: “Buy local” takes off
First Bank and Trust’s Settle says the slowdown in tobacco farming was a critical hit to smaller farmers in particular because “it was a very high value per acre crop.” A decade ago, with tobacco’s future uncertain, “there was a lot of talk about, ‘what can replace tobacco,’” says Settle, who headed the Appalachian Resource Conservation and Development Council at that time. “I think a lot of us realized it wasn’t going to be any one thing.”

For many small and medium-sized farms, consumers’ growing appetite for locally produced food, whether organic or conventionally grown, fell like rain on a parched field.

“Some started moving into the farmers market thing and going to produce,” Settle says, referring to farmers in the mid-2000s. “Any produce crop is going to be closer in income per acre than, say, corn or grain.”

As the number of farmers markets, restaurants seeking local produce and supermarkets buying local increased, Appalachian Harvest’s volumes increased. At the same time, farmers closer to urban cores broadened their marketing approach and found a variety of potential markets. Settle knows one farmer who sells many pumpkins to the company that decorates at Dollywood. Slaughter sells a significant amount of pork sausage directly to the Kingsport Provision Co. and to Betty’s Stockyard Cafe in Kingsport. He also goes old school, using the honor system to sell eggs from an outdoor refrigerator.

And with Robbins and Food City’s Tipton both anticipating continued growth in produce sales, the opportunities for farmers show no signs of abating. As crop selection widens, and growing seasons extend through use of hoop houses, “high tunnels” and other methods, there is plenty of demand out there, Robbins says.

“Right now I have no reason to look for demand, because I don’t have the supply,” she says.

Read the entire Q&A in the March 2014 edition of The Business Journal.

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