Academic journal article Journal of Agricultural and Applied Economics

Key Issues Affecting the Feasibility of Producer-Owned, Value-Added Ventures in the South

Academic journal article Journal of Agricultural and Applied Economics

Key Issues Affecting the Feasibility of Producer-Owned, Value-Added Ventures in the South

Article excerpt

The transition from agricultural producer to agribusiness entrepreneur is littered with obstacles not associated with traditional farming operations. Producers are typically faced with an established market for their products as well as denned production practices and budgets. These familiar industry institutions are not available for use in the agribusiness environment. As a result, entrepreneurs are faced with new, unfamiliar situations that can significantly affect the success of their proposed or fledgling business.

Key Words: agribusiness, agritourism, cooperative, demand, economic development, entrepreneur, entrepreneurship, goats, value-added venture

JEL Classifications: R11, Q12, Q13

This paper will examine issues facing southeastern entrepreneurs and agribusinesses. These issues are examined and highlighted, with the inclusion of case studies involving agribusinesses in Tennessee and Georgia.

Case Study Descriptions

Central Georgia Livestock Cooperative

Diminished farm returns due to drought, urban sprawl, and low commodity prices are forcing farmers to identify alternative enterprises that may create a profit and reduce risk. Goats are resourceful rudiments that are able to survive on forages that do not compete directly with those used by cattle and other livestock. In addition, Georgia has experienced significant growth in its immigrant populations, resulting in an increase in demand for goat meat and associated products.

In response to the conditions above, Georgia has experienced tremendous growth in its goat population during the past decade. The goats are typically sold through established marketing channels, such as area livestock auction barns, or sold off the farm directly to consumers. However, goat producers realized that by processing their goats, they would be able to capture a larger percentage of the marketing margin dollar.

Population Changes and Demand for Goat

Georgia's ethnic population growth has exploded since the 1990s. As Georgia's population changes, new cultural traditions are emerging. Islam is growing in Georgia and throughout America. One Islamic tradition involves the slaughtering of a goat for special occasions, holidays, and celebrations. Two significant feasts, the small Eid, which is celebrated at the conclusion of Ramadan, and the great feast of Eid. Muslims with adequate financial resources purchase goats for these feasts (Ecker). There are an estimated 4 million Muslims living in the United States, with almost all residing in the urban centers (Pinkerton et al.).

1. Hispanic consumers frequently purchase goat meat during the holiday season. The Hispanic consumers typically serve cabrito or a young, high-quality, milk-fed kid during this season.

2. Asian consumers tend to prefer high-quality young goats in the 60- to 70-lb. live weight range. These consumers typically consume goat meat only during the cool weather months.

The Livestock Processing Cooperative was started by members of the Central Georgia County's Meat Goat Association with help from the County Cooperative Extension Service. The idea of forming a cooperative came into being when a local meat processing facility in the county closed. Area goat producers met to discuss the possibility of purchasing the facility and processing their goats for sale in ethnic Atlanta markets. After the initial meetings, a number of goat producers decided to form the Livestock Processing Cooperative (Ferland, McKissick, and Reynolds).

The Cooperative was structured as a new generation agricultural cooperative. The members decided on the new generation cooperative format as the best option to secure an adequate supply of goats. The legal issues associated with the new generation cooperative ensure that the organization will have a stable supply of goats throughout the year by stipulating that each member supply the cooperative one goat for each share of stock they purchase. …

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