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The Profitable Path To Taming Sprawl Starts Here

Small farms serve local markets, conserve land

September 23, 2004 | By Keith Schneider
Great Lakes Bulletin News Service

MLUI/Pat Owen

Shetler Family Dairy, the only microcreamery in northern Michigan, is one of the outstanding examples of how small farmers in northern Michigan are embracing a more entrepreneurial business strategy to achieve financial success.

Kalkaska, Mich. – One of the truly good news stories in American agriculture, and it’s been that way for several years now, is what’s happening on Tyler Road here at the Shetler Family Dairy. Like thousands of similar entrepreneurial small farmers in Michigan and across the nation, George and Sally Shetler stopped selling their milk as a bulk commodity because all they were getting was squeezed.

They were small fry in an industry dominated by big players, producers of a bulk commodity in which prices essentially had not budged for 20 years. Continuing to supply the conventional fluid milk market, the Shetlers concluded, would take them down the same bankruptcy path that the United States Department of Agriculture says claimed almost 400 farms a week from 1974 to the mid-1990's, most of them small.

So in 1995 the Shetlers decided to investigate a more entrepreneurial approach. If the markets they could reach through conventional channels were unsatisfactory, what new market could they tap? The one right around them, as it turned out  - bottling and delivering their milk directly to stores in Traverse City, 25 miles away, the center of a five-county region with 165,000 residents and growing faster than almost any place in the Midwest.

The couple, who raised five children in a 90-year-old farm house with one bathroom and a lot of wallpaper with cows, sent a survey to local markets and learned that proprietors were eager to sell fresh food produced by local growers. They then sat at the dining table that serves as the hub of their busy home and penned a straightforward business plan in black ink on one page of unlined white paper – “Start small within 1995. Action to be taken: Pray!!” -- that accurately described the fast-growing business they and several of their children operate today.

Sell Locally, Keep The Farm
Shetler Family Dairy’s 38 cows supply the raw material for milk, cream, yogurt, and other food produced without chemicals or hormones. The dairy’s products are bottled in a $140,000 microcreamery the family built and stocked with used equipment gathered in three states. The dairy ships 1,300 gallons of milk and dairy products twice a week direct to 50 stores in the Grand Traverse region. Their distinctive truck has a set of Texas longhorns bolted to the roof of the cab, a white and black Holstein paint scheme, and a cute slogan: “From Moo to You.”

Does the new strategy work? You bet. Shetler Dairy’s revenue is expected to reach roughly $400,000 this year, almost four times more than George and Sally ever made just shipping raw milk. The farm has seven full- and part-time employees, including Priscilla Shetler, a daughter-in-law, and Kaleb Shetler, the oldest son, who manages the bottling plant. The family’s products have become so popular that the company’s annual farm day picnic on September 11 attracted 1,100 people and the Shetlers are weighing proposals to expand their dairy without adding more cows. They want to contract for the extra milk with other dairies in Michigan.

“You know what this has done for us? Every other weekend now I get off and don’t have to milk,” said Mr. Shetler, who is 53 and bought his 180-acre farm 25 years ago. During most of that time he managed to take just two family vacations that lasted a week each. Across the yard, calves called for their mothers and a yellow dog lay under a bench in front of the farm store and bottling plant the Shetler’s built four years ago. Enough people drive out to visit the farm that the store accounts for 15 percent of total sales.

Entrepreneurial Strategy Works
Shetler Family Dairy, the only microcreamery in northern Michigan, is one of the outstanding examples of how small farmers in northern Michigan are embracing a more entrepreneurial business strategy to achieve financial success. The key: Avoiding commodity markets and directly marketing their farm fresh products to consumers.

In effect, the old adage in agriculture to “get big or get out” is being turned on its head by growers who are staying small, agile, and much more profitable. Mike and Tina Werp, for instance, produce specialty baby vegetables for 15 exclusive restaurants in Traverse City, Detroit, and Mackinac Island, one of the state’s most popular tourist destinations. They have an 80-acre farm in Grant Township south of Traverse City, but do most of the cultivating in greenhouses and fields on just 10 acres. Total annual revenue: $150,000, or $15,000 an acre. Revenue, moreover, is growing steadily and already is enough to employ three full-time and three seasonal workers. In contrast, conventional corn growers in the region are fortunate if they earn $300 an acre. “The idea is to do things intelligently,” said Mr. Werp, an engineer who was raised in Detroit but migrated to the region in 1976 and started to work on the farm, which was then owned by his grandparents. “I’m not trying to do what Ford, GM, and Chrysler try to do. I don’t need my vegetables to be in every community.”

Exactly how many small entrepreneurial farms exist in the Grand Traverse region is not known. Most employ seasonal workers and do not pay into the state workman’s compensation fund, the primary means for identifying employers and measuring job numbers. In short, entrepreneurial farms are largely invisible to government and economic development agencies, said Bill Palladino, a small-business development specialist in the region. “We know it is a core economy for our region,” Mr. Palladino said, “but we don’t know how big it is yet. We want to know. The value-added ag economy is based locally, uses local resources, and takes those resources and extends them to the market place here.”

More Farm Profits Equal Less Sprawl
The success of Shetler Family Dairy, Werp Farms, and dozens of other small growers in northern Michigan has attracted the attention of the Traverse City Area Chamber of Commerce, which co-sponsored the publication of a regional food guide to link the region’s small farmers with customers. The guide, Select a Taste of Traverse Bay, was produced by the Michigan Land Use Institute and includes 140 farmers, markets, and small processors in five counties who sell $4.5 million worth of locally grown food each year and employ 270 full- and part-time workers. The array of products is impressive enough – fruits, vegetables, jams, maple syrup, baked goods – that Doug Luciani, the chamber’s president, said his organization now views small farms as an important entrepreneurial business sector capable of generating new jobs on farms and in small-scale processing and distribution.

“We want to capture the full value of that sector to the economy,” said Mr. Luciani. “We’re missing some of the value because we have a lot of hard-working people doing things in an isolated way. If we can provide small growers with some linkages, this region could see much more value-added food processing, cross-selling, and strategic alliances.”

The basic idea of putting buyers and sellers of homegrown food together, of course, is not new. Farmers markets have existed as long as the republic. But the ingenuity farmers are displaying in tapping new markets, and the eagerness that consumers are showing for farm-fresh foods, especially those produced without chemicals, is a growing phenomenon, according to every quantifiable measure available. Moreover, the trend is accelerating as local and state governments and the business community recognize that supporting small farms leads to other useful economic, environmental, and cultural outcomes. Mr. Luciani, for instance, said farms provide scenic open space that helps attract tourists and provides a brake on some of the unmanaged development and sprawl that is threatening much of the Grand Traverse region. 

Other States Encourage Innovation
Similar views are expressed in dozens and dozens of fast-growing urban and suburban communities across the country. The number of farms from 10 to 49 acres, or those most likely to be close to cities and suburbs, actually increased to 563,772 in 2002 -- 32,870 more than in 1997 -- according to the latest farm census by the U.S. Department of Agriculture. Some of those farms are CSAs, short for Community Supported Agriculture, which sell contracts to customers during the winter for a future share of their summer production of vegetables and fruits, and in some cases for dairy, chicken, pork, and beef. The CSA concept began in the United States in 1985 on farms in New York and Massachusetts. There are now more than 1,700 CSAs, according to a current article on NewFarm.org, a Web site of the nonprofit Rodale Institute.

The government also counts 3,100 registered farmers markets nationwide, up from 1,800 in 1994, and 300 in the mid-1970s. Consumers spend $1 billion annually at farmers markets, a pittance compared to the roughly $800 billion that Americans spend on food, but more than ever before. Farmers and other authorities say the market for local fresh food seems poised to follow the same soaring path to popularity that chemical-free food followed in the 1980s and 1990s. Organic food accounts for $13 billion in annual sales in the United States, according to the U.S. Agriculture Department, up from roughly $1 billion in the early 1980s.

Farmers are driving the innovation in developing new markets. In Lincoln, Nebraska, a group of ten farmers earlier this year opened what most authorities believe is the only grocery store in the nation owned and managed by growers. The 5,000 square-foot Centerville Farmers Market store in the city’s historic Haymarket district occupies the first floor of a renovated steam tractor factory. John Ellis, a farmer and the store manager, said the store is intended to operate year-round and features homegrown, largely chemical-free fruits, vegetables, meats, dairy products, and other foods (buffalo, ostrich, and emu meat are available) produced by 31 growers in the area. It cost $75,000 to prepare the space and business has been brisk. “We’re attracting some attention and we’re developing our market,” Mr. Ellis said in an interview.

Here to Stay
“There is every indication this is not a fad,” said Brian Halweil, a senior researcher at the Worldwatch Institute, an environmental think tank in Washington, D.C., and author of the forthcoming book about entrepreneurial agriculture, Eat Here: Defending Home Grown Pleasures in the Global Supermarket (W.W. Norton and Company). "It's a trend that is beginning to invade the mainstream food supply. Several things are driving the growth. People are dissatisfied with the anonymous foods out there and they are gathering around a model that implies there is a farmer on the other end. This is also about pleasure. The pleasure of knowing your farmer. The pleasure of having peace of mind about what is in your food. The pleasure of supporting your neighbor. The pleasure of knowing there is a connection between the food you buy and the landscape around you."

In Massachusetts, for instance, the five-year-old Farm Viability Enhancement Program has helped 139 family farms, or 2 percent of the state’s total, stay in business and keep their land in agriculture by making investments in their business plans in exchange for farmland conservation. Farmers who receive the $20,000 to $60,000 grants agree to keep their land in agriculture for up to 10 years. The program has protected 26,568 acres of agricultural land at a cost of only $266 per acre, or much less than what it would cost to purchase the land or the development rights.

In July, New York announced that it was investing $169,000 to improve and update 13 more farmers markets statewide. The grant was the latest in the Grow New York's Farmers Markets program, which has awarded $567,000 to 43 farmers markets since 2000. New York also approved legislation earlier this year to exempt its own government cafeterias, hospitals, prisons, and government offices from traditional contract bidding practices and allow chefs to purchase locally grown food if they are reasonably priced, but not the lowest bid. 

California has taken the same approach in supporting efforts by local school districts to buy locally grown food for public school cafeterias. The federal Department of Agriculture counts 400 school districts in 22 states that are buying food from local farmers.

Supporting small farms also is a priority of Michigan, which has a $4 billion farm economy and produces more kinds of farm products than any state except California. Two years ago Democratic Governor Jennifer M. Granholm noted during her campaign that "in light of the strength of agriculture to our economy, and the fact that we produce over 120 different types of agricultural commodities, it’d be crazy for us not to focus on value-added processing, marketing, exporting our homegrown renewable commodities." Last year Ms. Granholm launched a "Select A Taste of Michigan" program to promote asparagus and nine other fresh market crops. Rick Oomen, a 49-year-old vegetable producer in Hart, credited the program with raising prices. “The last two years we’ve enjoyed the best fresh market prices I can remember,” he said.

Such optimism is striking in an industry where bad news is generally thought of as the norm. Not now and not on many of the state’s 52,000 farms, including George and Sally Shetler’s. When farmers make money there isn’t a happier work place in America. Though there were days when the Shetler’s thought they might lose the farm, those have now passed, seemingly permanently. “Before we started bottling milk it was always at the back of my mind. Do something” said Mrs. Shetler. “We did and it’s working out.”

Keith Schneider, a journalist and editor, is deputy director of the Michigan Land Use Institute. A version of this article was published in the September 21, 2004 edition of The New York Times. Reach him at keith@mlui.org

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