4 years ago

Genesee County Agricultural and Farmland Protection Plan

Genesee County Agricultural and Farmland Protection Plan


APPENDIX C: AGRICULTURAL DEVELOPMENT CASE STUDY SUMMARIES AMERICAN WHITE WHEAT PRODUCERS ASSOCIATION: A Case Study in Farmer Cooperation in Value-Added American White Wheat Producers Association (AWWPA) is a producer-owned marketing cooperative formed in 1988 in Atchison, Kansas. Their mission is to develop white wheat markets for their producers. Currently, there are 300 farmers in this closed cooperative. AWWPA's primary goal is to add value, getting their farmer-members product further up the marketing chain. Recognizing the importance of the customer, AWWPA has spent the last ten years perfecting an identity preserved, targeted delivery, process for value added white wheat products. Overview of AWWPA Structure AWWPA is operated by an unpaid 10-member Board of Directors. The Board is elected by the members of the cooperative at shareholder meetings. The Board is responsible for appointing and overseeing paid administrative staff including the general manager, accountants, attorneys, and office staff. To participate in AWWPA, a farmer must become a member ($100 per share for 100 acres). Each grower-member signs an agreement specifying that hard red white wheat will be grown according to the following conditions: • Planted on clean ground. • Good agricultural practices will be used. • Use only certified seed from approved dealers. • Abide by the marketing agreement. All fields are inspected and farmers are required, after harvest, to submit a 35-pound sample from each field. AWWPA owns no elevators, trucks, flourmills, or baking facilities. Instead, it relies on several strategic alliances that facilitate the logistics of assembling and moving grain from producers to end-users. AWWPA contracts with several grain handling and transportation companies to collect wheat from growers and deliver it to flour mills. If a farmers’ white wheat does not meet quality specifications, AWWPA arranges for it to be sold as feed, with the farmer receiving payment for its feed value. AWWPA has agreements with three Kansas flourmills for milling and packaging of whole white wheat flour and wheat-based food ingredients (vital wheat gluten and white wheat bulgar). In turn, AWWPA directly markets whole white wheat flour directly to bakers and has trademarked the logo "Naturals' Wheat". Manufacturers of products containing white wheat are given a price discount for using the logo on their packaging. The largest markets for finished goods have been for breads and tortillas. AWWPA white flour is also sold through food stores under various brand names. Packaged flour is sold directly to flour merchandisers, with each miller receiving desired specifications for packaging and milling. Production and Marketing System Production of white wheat for AWWPA is open to any producer who agrees to the production and marketing contract. Production levels are set by expected demand and Copyright©, 2000: Agricultural & Community Development Services, Inc, Columbia MD 6

APPENDIX C: AGRICULTURAL DEVELOPMENT CASE STUDY SUMMARIES producers are assigned production levels on a first-come first-served basis. The grower must provide a map of the fields planted to white wheat and other agronomic data to facilitate inspection. Quality control is an important part of AWWPA's staff. The crop is inspected prior to harvest for factors that might affect the food quality of the wheat and steps -- like treatments or abandonment -- are taken to assure a quality product. During the initial years of AWWPA, a pooling arrangement was used as a basis for payments. Growers provided on-farm storage for up to 9 months or delivered the grain to a pooling facility. Farmers were charged for storing grain at the pooling facility. Within 9 months of binning the grain, a producer chose the day on which to set the price that determined the first payment (basis 70% of red wheat price). Payments were based on quantity and quality standards and, overall, average payments were about 30 cents per bushel over local hard red prices. In 1994 and 1995, AWWPA altered their pricing arrangements. Currently, producers can choose from three pricing options -- Flat Price Option, Cash Option, and Pool Option. The Flat Price Option guarantees a price of $3.50 delivered to Hutchinson, KS. The Cash Option allows a producer to receive the cash price of red wheat in Hutchinson plus 15 cents on a day selected by the producer. The Pool Option provides a producer with an initial payment of $2.60, and then receives up to 5 additional payments depending on the success of the marketing program. Once wheat is harvested and stored by a producer, each lot undergoes a standard mill and bake test. This process accounts for a large portion of AWWPA's administrative expenses because each test costs $95. However, the test serves 3 useful functions. First, it helps assure high quality wheat. Second, testing helps facilitate targeted delivery (providing end users with a product that meets their exacting specifications. Third, test results on each lot of grain allows AWWPA to minimize targeted delivery transportation costs. Copyright©, 2000: Agricultural & Community Development Services, Inc, Columbia MD 7

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