BELLINGHAM – Tim Lukens is fascinated by what people are willing to pay for a product.
Lukens, president and general manager of Grace Harbor Farms near Custer, says it wasn’t long ago when it would have been unheard of to pay more than 50 cents for a cup of coffee. That is, until Starbucks came along.
“I think Starbucks really opened the door for many small-scale farms by convincing consumers to pay up to $5 for coffee by adding to a simple product,” said Lukens, who operates the farm with his wife, Grace. “They did an amazing job creating value in a product.”
Value-added products, for example taking an apple grown on the farm and shipping it to the market as apple pie, plays a small role in Whatcom County’s overall agricultural economy. But it is the lifeblood for the small farms, said Henry Bierlink, administrator of the Whatcom Agriculture Preservation Committee.
“When you look at the costs of operating a small farm, it’s important to have something to sell that offers some price stability,” Bierlink said. “Small farms that are at the mercy of the price swings in a commodity market would have a difficult time surviving.”
In the commodity market, where raw material is sold in bulk, farmers have very little control over what they get for the product, because the price is tied to larger economic forces.
With value-added products, the farmer can charge a price that earns a profit, and then it’s up to the consumer to decide if it is worth it.
Bierlink expects the success of selling value-added products may catch on with larger Whatcom farming operations as well. The commodity market is difficult even for larger farms, so the committee has spent the past year studying whether the bigger dairy farms in Whatcom County could benefit from creating value-added products.
Bierlink said they’ve finished the first phase of the study, where they’ve discovered it could be profitable if 30 or 40 farms banded together to make enough of a niche product that could be carried either across the country or in markets such as Asia.
“There is an opportunity to take value-added products into larger markets, but we need to look into it more closely,” Bierlink said.
For now, smaller Whatcom County farms have a firm hold on value-added products. Lukens’ farm takes raw milk and makes soap and skin-care products, as well as yogurt and other dairy products.
“For a small-scale farm, it makes sense to go the value-added path because it is just too difficult to compete with the big farms that can make milk more efficiently,” Lukens said. “If you can find the right niche, you can create a business that’s better protected against price fluctuations and sell directly to a loyal customer base.”
Finding that niche was George Train’s goal when he started Pleasant Valley Dairy near Ferndale in 1974. He started with bottling raw milk, but as a small, 70-acre farm, he found it difficult to adjust to the oscillating volume numbers and prices.
“You ended up in situations where you either couldn’t produce enough milk or you produced too much,” Train said. “So I started looking for another market, and discovered there were very few local specialty cheeses in the local market.”
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