The ‘Process’ of Rebuilding a Local Food Economy

By Peter Metcalf, 5-12-09

Inside a plain strip mall just off U.S. Highway 93 in Lolo, Mont., Skip Cleek stands on teal drain boards surrounded by stainless steel sinks, counters, and a vacuum packer as rests his hand on a suitcase-size machine he calls the “coiner.” His baseball cap drawn tight, the ebullient handle-bar mustachioed Cleek boasts the machine can process in excess of 800 lbs of carrots an hour, “if you can feed them in that fast.”

Cleek manages the recently opened Montana Food Products, LLC, the state’s first for-profit contract packaging facility, or “co-pack” in industry lingo. President Ron Oberlander of Florence opened the facility because he wanted a place to process his line of U.S. Omega3 Food products.  He also saw a business opportunity in a facility that other food product entrepreneurs could utilize such as the couple who were in making the salsa they sell in area restaurants shortly before my visit. 

For folks who want to build a local food economy, the new food processing facility marks a significant step forward. 

Despite soaring demand for locally grown food, it remains primarily available only fresh, raw and in season, such as the delicious piles of salad greens, snap peas and summer squash that will soon fill the stalls of the region’s Farmer’s Markets, or as baked goods and jams, products allowed under state regulations to be made without a certified commercial kitchen. But many people would also like to purchase salad dressings for those raw vegetables, sauerkraut to pile on their elk sausage, or frozen Bitterroot Macs to make an apple pie in the winter, all made from locally grown ingredients. 

Yet processed local food products like these are practically non-existent in Montana due to a lack of processing and storage facilities.  This lack of infrastructure severely restricts what months of the year and what Montana-grown food products Montanans can eat.  Expanded food processing facilities like Montana Food Products will help more Montanans eat local food.  This is especially true for institutions like Missoula County Public Schools which rely extensively on processed food from a supplier for their students. 

“We really are looking at how do we increase the capacity of Montanans to feed themselves,” said Jan Tusick, a leading advocate for local economic development in the food industry.

Food processing facilities once dotted the state, especially creameries and meatpacking facilities but also canneries, sugar beet factories and cereal grain processing plants.  Cheap, efficient transportation networks and the decades-long trend of consolidation in the food packing industry, like agriculture as a whole, shuttered most of these facilities in favor of mega-operations closer to the nation’s population centers. 

That loss translates into a huge economic loss for the state as dollars flow out of state to purchase food. 

Not-So-Simple Supply and Demand

Redeveloping small-scale food processing faces many hurdles, including high start-up costs and a complicated regulatory process. But, until recently, the big obstacle had been a lack of consumer demand.

Now it’s just the opposite. As more and more farms filled up with commodity crops over the last few decades, farmers growing crops like carrots or tomatoes became more and more scarce. So now, the obstacle is one of supply.

“Every producer has a high demand for local products,” Mike Donahoo, director of sales and marketing for Montana Food Products, LLC. “There just isn’t enough growers to fill that need.”

Just south of Hamilton lies Homestead Organics, a six-acre organic farm that sprouts onions, cabbage, broccoli and all other types of greens.  On Tuesdays and Thursdays during the growing season, farmer Laura Garber sells all the produce she can grow, as well as homemade breads and jams at her road-side stand or on the weekend at area Farmers’ Markets. 

Garber would love to see more food processing in the state and even process some of her cabbage into sauerkraut herself.  But right now consumer demand in western Montana for fresh, local meats and vegetables far exceeds supply, which leaves little if any food to be processed.

“Why would I change from selling retail to selling super low wholesale at this point?” Garber asks. 

As much as the state could use some food processing, what it really needs she says, a position echoed by everyone I talked with, is more farmers and ranchers who grow food for the local market.

“It’s kind of the chicken or the egg.  Do you build the processing facilities or grow the food first?” she asks.

Cleek, for one, believes that by building the processing facility more people will decide to grow the food. 

Prior to the opening of this facility, if a grower grew too much of a certain crop or had a bunch of seconds, he or she had no reliable place to sell it locally.  But the mere presence of the food processing facility—and its contracts to process products like marinara sauce, apple pie filling and chopped carrots for Missoula Country Public Schools, Victor Public Schools and the University of Montana Dining Services through the Farm to Cafeteria program—changes that equation.

“Suddenly you could grow fields of carrots and know you could sell them because of the processing center, and the processing center (could sell them) because of the schools,” said Paul Hubbard of the Community Food and Agriculture Coalition, one of the organizations that helped start the Farm to Cafeteria Program.  “It’s really exciting.”

Negotiations are currently under way with growers across the state to provide Cleek those desired carrots, tomatoes and other crops, including an alfalfa grower who wants to sow a few acres in high-yield vegetables this year.  Cleek’s not looking for huge fields from each farm either—a quarter acre here and a quarter acre there will suffice.  He also wants to buy farmer’s broken carrots, as well as the twisted and crooked ones they can’t sell retail.  And he promises growers guaranteed contracts at “winter prices for a summer crop.”

“We look local first always” for ingredients, Cleek said.  “If we offer you a fair market price for your crop it works out better for us too.”

Where’s the Beef (Or Poultry)?

For Montanans who want to sell or eat locally raised meat, the lack of food processing facilities presents a formidable barrier. Despite a huge cattle industry, almost all the cattle born in Montana get shipped out of state on the hoof as the state’s few remaining slaughter facilities can only process a few dozen cattle per week. 

Without any processing facilities, the options for poultry are even more limited.  Right now small poultry growers only real legal option is to sell their birds “live weight” direct to the consumer, such as at the Farmer’s Market. This means the consumer technically buys the bird alive and then as part of the invoice “hires” the grower to kill and process it. 

As demand for local poultry has grown, thanks in part to public concern over food safety and security as well as the working conditions and use of undocumented labor at the nation’s gigantic meatpacking plants, local growers and food advocates sought a way to ensure safe products entered the market and to expand growers’ opportunity for retail sale. 

So last year Farms for Families (a Livingston, Mont.-based non-profit dedicated to the development of Park County’s food system) teamed up with Mission Mountain, the Alternative Energy Resource Organization and the Montana Poultry Growers Cooperative to develop a “mobile processing unit,” which is exactly what it sounds—a processing plant on wheels.

“The (unit) is designed to help small growers, under 1000 birds, to process their birds in a safe system and then sell them to market,” Mark Rehder of Farms for Families said. 

Rehder calls the unit “a rolling classroom on poultry processing” designed to train growers on state and federal safety regulations, safe handling and processing procedures and proper packaging for retail sale. Its mobility will allow growers across the state access to a facility licensed and inspected to process birds for sale in supermarkets.  It also means growers don’t stress their birds with transport prior to slaughter, an option some people see as more humane. 

The unit’s small size has created a bit of a regulatory headache.  Food and safety regulations at the state and federal level were written with vastly larger facilities in mind (think tens of thousands of birds, not tens of birds).  These regulations often don’t make sense for small facilities or can be outright cost prohibitive. 

At the same time, the U.S. Dept. of Agriculture exempts people who raise less than 1000 birds annually from an inspection of their processing procedures.  But the exemption is intended for people who raise chickens for their or their neighbor’s pot, not for retail sale. 

So as small scale processing facilities try to reemerge into the market, state and federal regulatory agencies are scrambling to figure out a clear and consistent way to license and inspect these facilities as well as who is responsible for their oversight, which in Montana falls either to the Department of Livestock or the Department of Health and Human Services.

“There is a national debate going on right now on how does this criteria basically get molded to fit small scale processing,” Tusick said.  “Every single state is dealing with this challenge.”

Tusick considers the convoluted regulatory maze one of the biggest challenges to the development of small scale processing facilities. Still she and the other organizers are confident they and the state can figure out how to regulate the unit under the law in a manner that also acts as precedence for any other future small-scale processing operation.

“We never foresee this as being the answer to small scale poultry production,” Rehder said.  “It’s a stepping stone.”

Feeding a Faltering Economy

Promoters of new food processing facilities in the state say their development will be a boon for the Montana economy.  Currently Montanans spend about $3 billion annually on food.  About 95 percent of that food comes from out of state. 

“We’ve lost this huge economic driver in terms of food processing,” Kiki Hubbard, the policy coordinator for Grow Montana, a coalition of agriculture and business organizations dedicated to the development of a sustainable Montana-based food economy, said.

Advocates like Hubbard argue additional food processing would help the state capture more of that money.  Expanded processing capacity will create jobs, open new opportunities food product entrepreneurs, provide farmers and ranchers value-added possibilities for their crops and generate tax revenue for communities.  Existing businesses like distributors, marketers and the building trades will reap the benefits too of increased demand for their services.

This spring Grow Montana and other groups asked the state legislature to provide a modest boost to the expansion of current food processing opportunities in the state. 

House Bill 583, which passed the Senate 71-27 and was signed into law late last month, authorizes the state to fund four established “bio-product innovation centers” to the tune of $250,000 over the next biennium, far less than the $740,000 backers had sought, but an increase nonetheless.  Located in small communities across the state, these centers provide farmers and food entrepreneurs with a space and technical assistance to develop a value-added product. The centers commonly focus on bio-fuels, but also assist entrepreneurs who want to develop say a zesty BBQ sauce. 

One center that stands to gain is the Mission Mountain Food Enterprise Center in Ronan.  Founded in 1998, Mission Mountain is a program of the Lake County Community Development Corporation, a federally funded not-for profit organization that works on economic development opportunities for rural communities in northwest Montana.

The first food processing center of its kind in the state, Mission Mountain focuses on the small business development side of the agricultural industry. The center provides budding entrepreneurs access to a certified commercial kitchen as well as important technical assistance in the development and marketing of their product. 

Starting a food products business is no small feat. It can take years of tinkering to get the recipe just right. Then it’s off to trade shows around the nation to try and find a willing buyer or distributor. Perhaps most prohibitive are the costs of building a certified commercial kitchen, the inspection process, and the necessary equipment. Even a first run of labels alone can cost several thousand dollars. Consequently many people who may want to start a food business simply cannot afford to. 

“The capital needs of a beginning entrepreneur are staggering.  It is the number one barrier.  It can stop most beginning businesses right in their tracks,” Tusick said.

Tusick says Montana in particular is a difficult place for entrepreneurs to begin due to its lack of infrastructure and institutional resources from governments or universities for such enterprises. That’s true especially in comparison with neighboring Oregon or Washington.

The Mission Mountain center helps address that need.  Tusick call the facility “an incubation space” for entrepreneurs to develop a prototype or serve a small market and said the facility is not intended to service established businesses.

One company Mission Mountain incubated is BrenTari Natural Creations. Now a successful small business, BrenTari Natural Creations sells its line of salad dressings, sauces and its well-known salsa in Costcos and supermarkets across the state. 

For several years owners Brent and Tari Colbry loaded their van each week to drive from Missoula to Ronan to make their salsa. As their business expanded, they outgrew the small facility. The closest co-pack facilities Tari could find were in Washington and Oregon.  But the Colbrys wanted to use Montana food and Montana labor. 

“I didn’t like the idea of saying we’re a Montana product and we’re made in Oregon,” Tari said.  Nor did she like the lack of direct quality control she’d have in her product. 

So when Skip Cleek, who worked for Mission Mountain, left to help start Montana Food Products, the Colbrys jumped at the chance to follow. 

“It’s just been wonderful,” she said.  “I love that not only are we Montana manufacturing, we’re creating Montana jobs.”

The company now employs five-part time employees to help manufacture their salsa.  The jarred products they contract out to Cleek.  And while their salsa historically featured local ingredients only in season, that is about to change.  They just inked a contract with a farmer on the Hi-line to provide fresh tomatoes from his 15,000 square feet of greenhouses nine months out of the year (the other three he regrows his plants). 

An additional ten food entrepreneurs currently manufacture their products at Montana Food Products and nearly that many more have contacted Cleek about getting started. 

In the midst of an economic recession, it is a delicious sign indeed. 

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