Columbia Plateau Producers/Shepherd’s Grain
As is often the case in cooperative efforts among growers, it requires one or two individuals with vision, persistence, and a willingness to do things differently, including adapting along the way. Karl Kupers and Fred Fleming are those visionaries and drivers for the Shepherd’s Grain venture. In the 1980s, after farming conventionally for about 10 years, the venture started when Karl set two 10-year goals for his farm:
- Develop a farming business that is economically sustainable without depending on federal commodity subsidies.
- Develop cropping systems that address the region’s primary agro-ecological sustainability challenges of soil erosion and soil degradation.
These goals guide the Columbia Plateau Producers, LLC and its Shepherd’s Grain brand. By 2009, Columbia Plateau Producers was selling more than 500,000 bushels of wheat under the Shepherd’s Grain brand. The venture continues to grow, having added 10 new growers in 2008 for a total of 33 grower members. They hope to market a million bushels from the 2010 crop. One key to their success is telling the story of Columbia Plateau Growers, and its farmer-members.
The story of Shepherd’s Grain Wheat, the farmers who grow it, and their land and communities has also become a story that the company’s customers, such as flour millers and pizza makers, tell their customers. In addition third-party Food Alliance certification helps all involved verify for the end consumer the practices and the values that set the company apart from other grain dealers.
Shepherd’s Grain is the brand for the products of the Columbia Plateau Producers, which is organized as a Limited Liability Company. The members of CPP can invite other growers to join the entity, as they did in 2008 when 10 new farmers joined.
CPP is a licensed grain dealer, acting as the agent to bring member wheat to market for Shepherd’s Grain. As with many other value-added ventures in their early years the Shepherd’s Grain business is only a small marketing outlet for member growers: Most of their product still goes into the commodity market. But the brand is a growing part of their marketing, and indicator of progress toward the venture’s goal of freeing their farms from federal commodity support programs.
Shepherd’s Grain sells flour, but it’s not a miller. Part of its success is realizing that the members are farmers and not millers. Shepherd’s Grain partners with ADM Milling to turn its wheat into flour, under an arrangement by which the Columbia Plateau Producers retain ownership and control of their own wheat through the milling process.
Shepherd’s Grain primary markets are direct-to-wholesale markets, particularly food service buyers and small and midsize bakeries in the Pacific Northwest region. It’s main distributor Food Service of America, which was the first distributor to take on the Shepherd’s Grain account. Since then Shepherd’s Grain has listed with more 10 distributors, creating a larger base of “sales people” in the marketplace and reaching more market segments.
Recently Shepherd’s Grain has achieved a presence in retail markets through co-branding arrangement with Stone-Buhr Flour Company. The 100-yearold West Coast flour brand recognized in Shepherd’s Grain the opportunity to set itself apart by sharing stories of the wheat farmers and their sustainable agriculture practices, which comes verified through third party Food Alliance certification.
A new line of all-purpose flour milled from Shepherd’s Grain wheat is increasingly found on supermarket shelves across the Pacific Northwest. The five-pound Stone-Buhr retail grocery flour packages carry the Shepherd’s Grain and Food Alliance labels.
Shepherd’s Grain supports this transparency from grower through retail with grower profiles and video clips on the “spotlights” page of its Web site. The page also allows customers to enter the product code date from a bag of flour to link to the farmers who grew the wheat.
There remains room for Shepherd’s Grain to expand in the Pacific Northwest region. Co-founders Karl Kupers and Fred Fleming have said they can see replicating the Shepherd’s Grain idea in other areas: “It’s better to move the idea, than move the wheat.”
Shepherd’s Grain leaders received financial and technical support for developing direct-seed (no-till) crop rotations, wheat varieties and flour blends.
Technical support includes assistance from a Washington State University farm management economist with analyzing costs of production for wheat rotations; ongoing research by a WSU agronomist on new wheat varieties that express the desired taste qualities; milling and testing small batches of these experimental wheat varieties at the USDA’s Western Wheat Quality Laboratory; a relationship with the Spokane Community College in which culinary students experimented with new Shepherd’s Grain flour blends and provided feedback to Karl and Fred; and a new consultation with the Cooperative Development Services regarding organizational structures for the Columbia Plateau Producers.
Food Value Chain
Shepherd’s Grain sells its wheat to ADM Milling in Spokane, Washington. Unusual in this arrangement with a commodity processor is the control that Columbia Plateau Producers negotiated over identity preservation, branding, quality control, and marketing rights. Such retention of these product ownership rights is not the norm in most agricultural processing situations, where farmers are suppliers to the processors and do not retain ownership or any control of the product once it is sold to the processor.
Retaining such control is one of the challenge that many producers face when structuring processing and other value-added agreements for sales in the more relationship-based foodshed markets. Beginning farmers and ranchers need to seek out willing collaborators and develop personal and business relationships, such as Shepherd’s Grain did with ADM, to allow them to penetrate the market cost effectively.
Shepherd’s Grain works closely with distributors for its primary direct-to-wholesale marketing and with buyers of its flour that sell retail themselves. “Shepherd’s Grain has decided not to get directly into retail sales, but we can have a retail presence through co-branding with Stone-Buhr Flour,” Karl Kupers said of its collaboration with the retail flour brand. This strategy recognizes the importance of focus – knowing which markets the organization can handle, and which are better addressed by partners with established presence in those market sectors and/or expertise to service those sectors.
Key to carrying the wheat farmers’ values and stories all the way through to the end consumer is third-party Food Alliance certification, which some Shepherd’s Grain partners also have. The Columbia Plateau Producers' group of wheat farmers is certified through the Food Alliance on a range of environmental and social standards. One of Shepherd’s Grain’s primary distribution partners, Food Service of America, became a Food Alliance certified handler in 2008.
During 2007, Shepherd’s Grain also became a member of the Whole Grains Council. “We believe that high standards and third party certification are important to prevent ‘green washing’ ... as long as there aren’t too many labels in the marketplace,” says Karl Kupers.
Member growers are the foundation of Shepherd’s Grain food value chain. And by partnering further down the chain, the company has been able to successfully “de-link” their product pricing from the commodity market.
Shepherds Grain sells its branded wheat products to flour buyers through contracts based on a semi-annual fixed price rather than one that fluctuates with the commodity market price for wheat. This helps member growers with more stable pricing. It also provides a simplified costing arrangement for customers who no longer have to contend with price fluctuations.
Building independence from commodity pricing is quite typical in the new agriculture and foodshed specific marketing. It reflects the fact that companies can base their real and perceived benefits beyond that of the commodity price alone.
Originally, Shepherd’s Grain set one annual price. But after commodity price volatility in 2007, it had to adjust the model to reflect commodity pricing but nevertheless build independence from it. A new model resulted, which is a mixture of the characteristics of a semi-annual fixed price with adjustments to commodity board pricing. This hybrid pricing model illustrates the company’s ability to adapt with commodity markets while also reducing vulnerability to them.
Key to the Shepherd’s Grain brand, and to accomplishing the company’s goal of conserving and improving soil, is no-till cropping. This practice protects soil and saves fuel, too. Conservation agencies were helpful in the learning and implementation required, including funding for some research and development from the USDA Sustainable Agriculture Research and Education program (SARE).
No-till involves seeding directly into the stubble of a previous crop, eliminating plowing and other tillage. The presence of ground cover with this system minimizes soil erosion. In fact, the Shepherd’s Grain growers' no-till practices have been more widely adapted in the Pacific Northwest region over the past decade, providing a base of other farmers who could join the cooperative venture as needed, and extending agro-ecological sustainability wider in the region.
Culinary Arts Program- Spokane Community College
Western Wheat Quality Laboratory -USDA
Besides funding from SARE to support transitioning to no-till and direct seed cropping, Shepherd’s Grain has relied mostly on member’s contributions of sweat equity and savings to get the business going.
The original visionaries, Kupers and Fleming, invested their sweat equity of time and effort, along with “several thousand dollars” each for initial brand development and marketing.
Additional revenue comes from small fees that new invited members pay to join the Columbia Plateau Growers LLC, and from a small margin those Columbia Plateau Producers charges members for marketing their wheat to the brand as a licensed grain dealer. CPP takes a small margin on the wheat it handles to operate the business. At this time all staff is still part-time, keeping costs down. But the vision is that in the future full-time resources can be deployed to grow and support the business.
Individual member wheat growers finance their own operations as independent operators. Co-founder Fred Fleming is an example of a producer who has, “…counted on Farm Credit since day one…” appreciating their understanding of agriculture. The Farm Credit system is a federally chartered nationwide network of borrower-owned lending institutions.
- Thinking “outside the box” on both environmental stewardship and cost/pricing structure created the Shepherd’s Grain opportunity. The first decade of the business has resulted in a credible presence for the brand that is now generating interest for their value-based products beyond just those from the initial crop involved of hard red wheat.
- Branding drives growth, while third-party verification by Food Alliance and other trust and transparency measures support it.
- Develop the value-added opportunity parallel to your ‘everyday’ business. The Columbia Plateau Producers members continue to grow wheat for mainstream markets and always have the fallback that their wheat can go to the commodity market. The Shepherd’s Grain venture demonstrates that there are opportunities in new channels.
Decision Tree Snapshot
Food Value Chain
Primary Business Activity
- Processing: ADM Milling
- Distribution: Food Service of America + 10 others
- Planning and Policy: Whole Grains Council
- Sustainable Agriculture Research and Education (USDA, National Institute of Food and Agriculture)