Sunrise Orchards

Cornwall, Vermont
http://www.sunriseorchards.com/

Overview

Sunrise Orchards, owned and operated by the Hodges family, is a 200-acre apple farm located in Cornwall, Vermont, just south of Middlebury, right in the heart of the Champlain Valley. The Hodges — Barney Jr., Christiana, their young children, and his parents — grow several varieties of apples including McIntosh, Empire, Cortland, Honeycrisp, Paula Red, Macoun, Red Delicious, and Granny Smith. They produce about 120,000 bushels each year.

When Barney Jr. took over leadership of the family business in the late 1990s, his goal was to move from relying on large commodity market buyers (and low commodity prices) to capturing more of the business between the farm and the consumer. To do that, Sunrise Orchards needed to find a way to store its apples so it could sell them through the year, rather than just ship its entire harvest to a few commodity buyers as it used to do.

The Hodges purchased an existing controlled atmosphere storage facility, which is designed to delay the ripening process and keep apples crisp through the winter. They are currently working with local community allies to make this facility available to more farmers and products and thereby help build area farms’ wholesale marketing capacity.

The facility has been key for Sunrise Orchards, which now markets its apples through the year direct to stores throughout Vermont, New Hampshire, and New York, and through Red Tomato, a non-profit organization that distributes the orchard’s apples to places farther afield, such as Philadelphia, New York City, and Boston. Red Tomato’s Eco-Apple™ label, and its work building a network of producers to supply consistent, quality fruit to grocers in the Northeast, is another key part of Sunrise Orchards’ switch from commodity to regional, differentiated marketing.

Business Structure

Sunrise Orchards is operated by Barney Hodges Jr., his wife Christiana, and his father, Barney Sr., who planted the orchard in the late 1970s and early 1980s. Barney and Christiana own the farm business and have structured it as a partnership. 

The couple owns Vermont Refrigerated Storage separately from the orchard business along with a business associate. In early 2011, the Hodges and local community allies began the process of studying the feasibility of developing the facility into a wholesale hub for area farmers. With 35,000 square feet — enough room for 220,000 bushels of apples (twice Sunrise Orchards’ typical crop) — they hope to find new opportunities for diversified storage and processing of local foods.

Local collaborators in the feasibility analysis include the Addison County Relocalization Network (ACORN) and the Addison County Economic Development Corp.

Markets Served

Sunrise Orchards sells about 40 percent of its crop direct-to-wholesale through the branded network of farms that Red Tomato develops and coordinates for sales to grocery stores in the Northeast. Another 40 percent is direct-to-retail grocers in the Northeast; that is, direct delivery to the store doors of these wholesale customers. These two channels are now the farm’s highest revenue channels. 

Traditional sales through wholesale brokers are down to 20 percent of the farm’s business and serve more as an outlet for the rest of the orchard crop, particularly in abundant years, rather than a primary focus. This brokered outlet is less profitable for two reasons. One, the broker’s share of the sale has to come out of the total. Two, brokers cannot rely on a strong supply from Sunrise Orchards because the farm focuses on its direct-to-wholesale and direct-to-retail markets first. The brokers, therefore, offer Sunrise Orchards less than they might offer a stronger supplier.

Advisors

In addition to advice from the original orchardists — Barney Jr.’s parents — Sunrise Orchards works with a range of businesses and organizations interested in the same foodshed development objectives to build regional marketing options for area farms.

Red Tomato is one advisor and business alliance. The non-profit organization works with some 40 growers of fruits and vegetables in the Northeast. Red Tomato coordinates the many activities that have to happen between these farms and the retail buyers who want to stock their local, sustainably produced products. It selects producers to work with based on quality, volume, and other capacity. It draws on the services of three trucking companies in addition to the storage, packing, and transportation capacity of the farms in its network. Red Tomato also markets the produce, including development of packaging and branding that differentiates the farmers’ products. One example is its Eco-Apple™ label for apples from farms like the Hodges’ that practice advanced integrated pest management as a way to reduce reliance on synthetic chemicals. Red Tomato is a business ally on many levels, including consultation with growers and others about market opportunities and how they can work together to make the most of them. Barney Hodges Jr. serves as a Red Tomato board member, as well.

Sunrise Orchards also works with typical organizations that support farms with production issues, such as university extension. Less traditional is the collaborative working relationship the Hodges have with local community collaborators regarding development of the Hodges’ Vermont Refrigerated Storage facility: The Addison County Relocalization Network (ACORN) and the Addison County Economic Development Corp.

Food Value Chain

In the chain of activities from production through marketing, Sunrise Orchards manages several functions and alliances on other functions.

Sunrise Orchards is primarily a producer of apples. It also does direct-to-retail sales on its own, to grocery stores in the region. For its direct-to-wholesale market, the farm works with Red Tomato for the aggregation, distribution and marketing needed to be part of that network of farms. For all of its sales, Sunrise Orchards partners with its own, separate Vermont Refrigerated Storage business for storage, packing, and order fulfillment.

In the planning and policy end of the food value chain, Sunrise Orchards’ work with local community collaborators (ACORN and the Addison County Economic Development Corp.) will play a big role in how the Vermont Refrigerated Storage facility develops over time. In addition two local institutions that are interested in buying local foods — Fletcher Allen Health Care and Middlebury College — are part of discussions. The town of Shoreham where the facility is located is also involved.

As reported in the local Addison Independent newspaper, the “institutions stand to benefit from a local storage and processing facility, since it would guarantee a predictable supply over a longer period of time.”

Jonathan Corcoran, president of ACORN, told the newspaper that the development plays into a larger plan for the growth of a local food infrastructure — one outlined by the recent strategic plan of the Addison County Local Foods Collaborative, which Corcoran authored. The group hopes to launch the ACORN Wholesale Collaborative, a network that would address another main problem that institutional buyers face in looking to purchase local foods: It would act as a centralized broker for the smaller, independent local growers.

Programs

Over the years, Sunrise Orchards has worked with a number of programs, including USDA’s Farm Service Agency for financing.

Most recently, the farm’s interest in the development of its Vermont Refrigerated Storage facility has leveraged two more programs. A Rural Business Enterprise Grant from the USDA provides $63,000 through the town of Shoreham for a feasibility study of opportunities to expand services. A second grant, from the Vermont Agency of Agriculture, contributed $20,000 for infrastructure improvements at the plant that will facilitate the selling of Vermont produce to institutional buyers.

Finance

An operating loan from the Farm Service Agency has been a key source of financing for the changes Barney Jr. began to make when he took over the orchard. His parents made the farm’s initial planting investment about 40 years ago. They worked off the farm during the years it took for the trees to mature into a commercial orchard and began farming with little debt. 

Sunrise Orchards now carries significant debt because of the investments it made to make a major business change. But the farm is earning enough to continue investing in its future while paying on its debt and covering its bills.

Links

Apples

Decision Tree Snapshot

Advisors

Business Structure

Finance

Markets

Food Value Chain

Primary Business Activity
Partners

Programs