Consumer demand for local foods creates opportunities, challenges

MANDAN, N.D. - In Vermont, where Angela and Brian McGinness used to farm, small towns don't have big grocery stores.

"In every town, people buy food from their neighbors," Angela McGinness says.

Angela's home state of North Dakota, where they decided to move, was more of a blank slate for local foods. The McGinnesses started Riverbound Farm south of Mandan, N.D., in 2009 as a Community Supported Agriculture venture.

"Buy local" has become a bit of a catchphrase in the food scene. Consumers express interest in knowing more about their food, where it came from and how it was grown. That creates an opening for producers who want to try out new marketing techniques, but it also creates its own challenges.

Riverbound Farm was one of the area's first CSAs, in which people pay to become members and get produce in return. About 200 members joined per season, and members were supportive enough to help construct a building where they could pick up their produce.

But the farm recently wrapped up its final harvest. The toll of producing foods for local consumption had become more than the McGinnesses were willing to take on, with increasing physical, social and economic difficulties.

A growing trend

According to a U.S. Department of Agriculture report released in December 2016, 167,009 U.S. farms sold $4.8 billion of raw commodities and $3.9 billion of value-added commodities directly to consumers, retailers, institutions and local distributors in 2015. States in the southwest and northeast accounted for the biggest chunks of the local foods' pie, with more than half of U.S. sales coming from those regions. While no state-level results were published for North Dakota, South Dakota or Montana, Minnesota showed sales of more than $100 million in local food sales in 2015 by more than 2,500 operations. Previous similar reports show a continued trend toward local food consumption.

"Everybody who comes in here is looking for local, first above all else," says Casey Bettenhausen, produce manager of the Bis-Man Community Food Co-op, located in Bismarck, N.D.

As more people look to buy local products, some farmers and ranchers have found opportunities to capitalize on the trend.

Kathy Goetz, owner of Bessy's Best in Sterling, N.D., says there's no doubt offering a local product has helped her small milk, cheese and other specialty products business succeed.

About 10 years ago, Goetz and her husband, Blaine, were trying to find a way to stay on the dairy farm. Milk prices had gotten so low that they didn't know if they could keep going.

So, the Goetzes talked to Dan's Supermarket in Bismarck about whether they would be able to sell some locally processed products. Dan's agreed to carry Bessy's Best, so they moved forward.

"It saved our farm," Goetz says of starting Bessy's Best. "I know we wouldn't be farming otherwise."

Now Bessy's Best products are in multiple stores in central and western North Dakota, as well as at a small storefront on the farm in Sterling where people can pick up milk, cheese, yogurt and more. The store operates on the honor system and mostly was started to serve the needs of local farmers.

There were challenges, of course. Marketing was more involved than they realized, and they were trying to convince people to buy whole milk - the least popular type of milk.

Goetz says other farmers and ranchers who are interested in local marketing should make sure they do their homework first. Make sure there is a market and make sure you know your business.

"For us, it really was worth the chance," she says.

McGinness says there was a lot of enthusiasm for Riverbound Farm when it got going. Of the farm's approximately 200 CSA shares most years, about half came back annually, she says.

But the economy took a hit when oil and commodity prices dropped, giving fewer people the disposable income for local produce. And McGinness says fewer people are buying into CSAs nationwide, possibly from the increasing availability of meal kit boxes and a lack of time to utilize the amount of vegetables that come from a CSA.

The other issue, she says, is that the marketplace for local foods has become a little more crowded.

More competition

The Bis-Man Community Food Co-op offers some local products as well organic and natural products and has been open more than a year. Carmen Hoffner, store manager, and Bettenhausen say there's no firm numbers on the amount of local products they offer. It varies per season and per what is available. But, there's no doubt that's what customers are after.

The co-op is open to the public but is owned by its approximately 3,300 member households, Hoffner says. The members will get dividends when the co-op is profitable and get special discounts and sales.

The co-op draws many of the people who otherwise might be interested in a CSA membership, McGinness says.

The McGinnesses were involved in the efforts to start the co-op, even though they knew from the beginning it might not be positive for their business.

Riverbound Farm had a grower agreement with the co-op for 2017 but stopped delivering produce after the co-op didn't keep current with payments. The co-op has caught up on the $13,000 they owed the farm, but McGinness says Riverbound Farm had agreed to grow more than $50,000 in produce for the co-op. The loss of those sales, along with a 2017 drought that knocked out sweet corn and other challenges, made keeping going hard economically.

Hoffner says the situation with producers not getting paid in a timely manner, along with poor communication about what was going on, was regrettable. She only has been manager for 3½ months, and she says efforts to repair relationships are ongoing. Plus, the co-op will no longer promise to buy a certain amount of product.

"We certainly don't want to make promises we can't keep," she says.

But the economic situation only was part of the McGinnesses' decision to leave full-time farming. The physical toll of vegetable farming had begun to leave its marks. Riverbound Farm included eight to 10 acres of vegetables to be picked into totes, row by row. Most years, the farm had two employees or interns working with them. But the situation in 2017 meant the McGinnesses did it all themselves.

They were "burnt out and ready for something new in our lives," McGinness says.

For 2018, the McGinnesses and friends will use the farmland as a large community garden. They may, in the future, use one of their high tunnels to start an online garlic business. Brian McGinness now is working at United Tribes Technical College in Bismarck, where his department is starting a sustainable agriculture program, and Angela McGinness is pursuing a nursing degree.

The McGinnesses still believe in local foods and hope others will find ways to make it work. When they focused just on the CSA, things went well, and Angela McGinness says even with their difficulties with the Bis-Man Community Food Co-op, they don't regret their involvement. They want people to know that local marketing can work.

"Being a professional local food producer is completely a viable option for people," she says.