The Small Farms Industry Clusters (SFIC) Project - Plone Site

The Small Farms IndustryClusters (SFIC) ProjectFunded by theUSDA/CSREES National Research Initiative,Small Farms and Rural Community Vitality Initiative,Grant No. 05-55618-15744 and supported byThe Northeastern Regional Center for Rural DevelopmentLocated at The Pennsylvania State UniversityThe Small Farms Industry Clusters Project, 2005

A partnership among:Cornell University, Small Farms ProgramUniversity of MaineUniversity of Maryland Eastern ShoreUniversity of MassachusettsCommunity and Rural DevelopmentInstitute (CaRDI, Cornell)The Pennsylvania State UniversityWest Virginia University andThe Northeast Regional Centerfor Rural DevelopmentThe Small Farms Industry Clusters Project, 2005

About the project3 Years: 2005-20086 States, and growing 320,0005 Disciplines3 Functions: research, extension, teachingThe Small Farms Industry Clusters Project, 2005

This project examines how “clusters” of small farmsachieve agricultural economic developmentand environmental management objectivesidentifies how clusters support long-termfarm viability and community sustainabilityengages farmers and developmentprofessionals in research and outreachuses powerful computer algorithms toanalyze and understand social networksThe Small Farms Industry Clusters Project, 2005

Clusters are concentrations offirms or businesses that:are located in relatively close proximitycompete with each other in similar marketscooperate to enhance technical skills andmarket accesssupport, through social networks, growthand development of individual businessesThe Small Farms Industry Clusters Project, 2005

Clusters are concentrations offirms or businesses that:share common inputs such as labor withspecific skillsrecruit support industries based upon thelocal concentration of firmsbenefit mutually from new, location-specificknowledge generation andwork together to respond to new demands,such as environmental goalsThe Small Farms Industry Clusters Project, 2005

General research questionsHow and why do clusters form?What are minimal ingredients (how do weknow we have one)?What are their benefits, their costs?How can clusters be nurtured for furthergrowth?The Small Farms Industry Clusters Project, 2005

We examine and compareclusters formed around:1. traditional commoditiesdairy, wines, mushrooms2. agricultural practices or philosophiesorganic vs. non-organic3. social or ethnic networksHmong, female, disadvantagedThe Small Farms Industry Clusters Project, 2005

Clusters provide an ideal organizationalframework for analyzing all of thefactors impacting an industry:Economic:– profits, transactions costs, marketingSocial:– formal and informal networkingEnvironmental:– impacts of farming practices on the environment andimpacts of environmental regulations on farmingBiological:– philosophical basis underlying farm managementpracticesThe Small Farms Industry Clusters Project, 2005

About ClustersThe importance of clusters suggestsnew roles for government at [all]levels removing obstacles to thegrowth and upgrading of existing andemerging clusters takes on a priority.All clusters can be desirable, and alloffer the potential to contribute toprosperity.Benefits are internal to the cluster,not the individual firm.Michael Porter (2000, pp. 15, 16 and 27).The Small Farms Industry Clusters Project, 2005

This project is multi-disciplinary,multi-functional and multi-stateDisciplines involved:HorticultureAnimal SciencePlant and Soil ScienceRural SociologyAgricultural EconomicsFunctions involved:States and clusters involved(Sept. 2005):NY farmersChestermushroomResearchOutreachTeachingWV organicsWAN(PA)Eastern ShoreOrganic farmers(3 Maples)The Small Farms Industry Clusters Project, 2005

Overview of groups studied (selected)NameNorth Country DVIPennsylvania DairyChester MushroomFinger Lakes Win.Tuscarora growersNY Certified Organ.3-Maples, ESHmong farmersHisp. new farmerWomen’s ag msF,8 DM52F,CM,DM25F,DM10F,DM35Key: F farmers, IS input suppliers, CM commercial, DM direct markets, PU proc.unit

Understanding and harnessingthe power of social networksWho talks with whom? How often?Who are the opinion leaders?Who are the between-cluster “brokers”?What does this mean for more effectivedelivery of extension materials?Do farmers sit back at Extension meetingsor are they active participants?Degrees, betweeness, closeness (SNA)

Examples of clusters andcluster relationshipsAdditional cluster profilesare being prepared byteam members

The Mushroom Cluster in Chester County, PAMushroom GrowersAssociation of PA;American MushroomInstitutePenn State University,Ag. Experiment Station/Cooperative ExtensionJ.B. Spawn Co.Mushroom Supply Co.L.F. Lambert Spawn Co.Land: gentle, rolling hills(important for houses)Water: adequateground supplyKnowledge creation andtransfer (yield increases)InputsMushroomGrowersRules andregulationsLabor (Society ofFriends/Quakers):Experienced growingroses, carnationsHorse manure, straw,other compostmaterialsBasic data are from Harris (2004)OutputsPA’s Food &AgricultureClusterPA tate highway, rail;proximity to major citiesMushroom brokers,transporters,packers, sellers 2005 The Northeast Regional Center for Rural Development

WinemakingequipmentGrapestockFertilizer, pesticides,herbicideState government agencies (e.g.,Select Committee on WineProduction and Economy)BarrelsGrape harvestingequipmentBottlesCaps & /processingfacilitiesLabelsPR & advertisingSpecialized pubs(Wine spectator,Trade Journal)California Agricultural clusterEducational Research & Tradeorganizations (e.g., Wine Institute, UCDavis, culinary institutes)Tourism clusterFood clusterCalifornia’s Wine Cluster (based on Porter 2000, p.17)

Industry Clusters for SmallFarms, NRI proposalS. GoetzProcessingand deliverychannelsEconomicFarm profitsScaleEfficiencyT. KelseyD. SmithW. Whitmer: outreach/educationand cluster strategic planningT. Gabe: cluster benefits, trainingD. Smith: clusters, dairyJ. Tomlinson: workforce dev., dairyM. Simsic: New York City clusterRural Community ViabilitySmall Farm ViabilitySocialNetworkingSocial capitalLeadershipD. KuennenE. MattoxEnvironmentalRun-offPollutionRegulationsF. Mangan K. BrasierM. MoreiraW. WhitmerL. JonesBiologicalField Mgmt.OrganicA. RangarajanF. Mangan(Name of co-PI or collaborator with primary responsibility shown in italics)

Overview of project participants and componentsClusters ofsmall farmsPrimary projectcontact/liaisonProjectAssociate(s)Faculty contacts(subject matter)Office support andoverall projectmanagementThe Northeastern Regional Center for Rural DevelopmentThe Small Farms Industry Clusters Project, 2005

This project addresses all fourPriority Areas of the USDA SmallFarms/Rural Vitality RFA(a) Environmental management and biologicalfield practices can readily be compared acrossdifferent clusters(b) “Value chains” are essential cluster elements;we study interactions affecting high returnproduction, processing and delivery channelsThe Small Farms Industry Clusters Project, 2005

This project addresses all fourPriority Areas of the USDA SmallFarms/Rural Vitality RFA(c) Clusters are a natural organizing framework forstudying interactions among economic, social,environmental and biological forces related tosmall farms and rural communities(d) Drawing on a close working relationship withcluster members, we solicit ideas about emergingthreats and opportunities for small to mediumsized farmsThe Small Farms Industry Clusters Project, 2005

Data collectedThe social benefits, challenges of participatingResources the cluster providesThe differing abilities, contributions and values ofother membersChanges in behavior or attitudes as a result ofparticipating in the clusterHow to grow and enhance clustersMeaning of leadership in a cluster contextSocial or cultural norms that limit or enhancecluster developmentContinued on next pageThe Small Farms Industry Clusters Project, 2005

Data collectedThe formal & informal interactions among membersThe economic benefits of participatingOpportunities for sharing and learning w/i clusterImpact of cluster on the local communityFarm profitability (revenues, expenditures)Meaning of farm sustainability, including lifestyle,community, family considerations and profitsFarm management practices related toenvironmental concernsMarketing practices usedThe Small Farms Industry Clusters Project, 2005

Looking ahead The Small Farms Industry Clusters Project, 2005

In a flat world, branding and regionalidentity are keys to (farm) prosperityClusters are essential to creating a regional/brand identity

The OpportunityMove from producing basic commoditiesto providing sophisticated consumers withlasting experiences: clusters are key forcreating regional brand identitiesFrom wine-tasting to hosting heritage trailsorganized around vineyardsmummnapa.com

Changing Times1960s and 1970s: Making things cheaper– mass production (Taylorism)– division of labor, advantage based on cost1980s and 1990s: Making things better– Quality and speed key, automation– TQM, JIT, flexible specialization2000s: Making better things– aesthetics, authenticity– design, innovation, uniquenessSource: Stuart Rosenfeld, RTS

To whom do you want to sell?Estimated share of grocery market 01016.22.533.594.690200220032004Basic data: Retail Forward

Summary of research questionsHow agricultural clusters form and functionHow participation in a cluster affects farm managementpractices environmental impacts, profitability and access tomarketsWhether clusters help small farmers innovate and adaptmore quicklyWhether cluster analysis can help strengthen the way thesegroups form and compete/collaborateWhat new research and extension needs (and opportunities)exist for a cluster as opposed to an individual growerCommonalities and differences among clusters based oncommodity, ethnicity, agricultural philosophy, and how theyaffect management of production, environment andmarketing of crops or productsThe Small Farms Industry Clusters Project, 2005

An InvitationPlease contact us if you are interestedin partnering on this project Stephan J. Goetz, Project Director sgoetz@psu.edu www.nercrd.cas.psu.edu

Ha: Clusters raise the profitability (sustainability) ofgroups of small- to medium-sized farmers beyondlevels that individual farmers can achieve operatingon their own.Sub-Hypotheses:1. Clusters with greater density among, and lessdistance between, members are more effective2. Cluster benefits are greater: for small farmers, andfor farms organized around ethnic groups andagricultural philosophies rather than commodities3. Clusters organized around agriculturalphilosophies, social networks or ethnic groups havedifferent environmental practices than do thoseorganized around primary commoditiesThe Small Farms Industry Clusters Project, 2005

Sub-Hypotheses (cont.):4. Clusters organized around agriculturalphilosophies, social networks or ethnic groups havedifferent market access channels than clustersorganized around primary commodities. Forexample, Hmong farmers in Massachusetts5. Every cluster has a champion(s), who holdstogether the soft network infrastructure needed tomake the cluster work6. Clusters become more effective as they get older,become institutionalized and socially accepted inthe region, and as they create a regional or brandidentityThe Small Farms Industry Clusters Project, 2005

The Mushroom Cluster in Chester County, PA Labor (Society of Friends/Quakers): Experienced growing roses, carnations Penn State University, Ag. Experiment Station/ Cooperative Extension Mushroom Growers Association of PA; American Mushroom Institute Mushroom Growers Mushroom brokers, transporters, packers, se