Business Case Description

Shagbark Seed & Mill, a certified organic seed cleaning and flour milling facility that markets grains, dry beans, flours, chips, crackers and pasta–all grown in Ohio–proposes to expand its Heirloom Popcorn line to a bagged, ready-to-eat product, and market it as an Appalachian product, since the variety has been long grown in our region. We are seeking partners to assess the market, pioneering farmers from the Appalachian region to grow heirloom varieties of popcorn, and potentially investors into various aspects of the value chain including equipment. We have a small grant from the Central Appalachian Network Mini Grant program to conduct outreach and market research and are looking for partners to help move this expansion forward.

The impetus for this expansion is to expand east and south to reach farmers and markets in Appalachia, so the impact of a popular product can be enjoyed by our region's farmers and eaters. Shagbark owners are well aware that ready-to-eat products outweigh those that must be prepared--evident in their corn tortilla chips and cracker sales, which account for 30+% of Shagbark Seed & Mill’s revenue. These sales reflect more demand for organic corn from farmers in the region, and a bagged ready-to-eat Heirloom Popcorn has the potential to create similar opportunities or farmers in the Appalachian region and increase Shagbark's fiscal strength to carry out the broader work around building soil through good farming practices, increasing market opportunities for the Appalachian region’s farmers, introducing high nutrition and delicious grain and bean products to our region’s communities, and improving food access and health.

Now that Shagbark associates have visited three commercial popcorn facilities (Ohio, Delaware, and Illinois), we have gathered data about various logistical options for various scales of production. We could start anywhere from small-scale popping of our local popcorn at farmers markets, to seeking investment to install a full commercial scale popping and bagging line in our production facility, and a spectrum of options in between. Given Shagbark's level of resource commitments in current product lines and goals, first steps will likely be toward the more modest end.

Proposed Location

Athens, Ohio

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Value Proposition

<p style="margin-left:.5in;">Shagbark Seed &amp; Mill processes an heirloom variety of popcorn, grown by several Appalachian Amish partner-farmers in Chesterhill, in Morgan County.</p><p style="margin-left:.5in;">The impact that this project is likely to have is both direct and indirect. Directly impacts include:</p><ul><li style="margin-left: 0.5in;">Growers in our region will receive increased demand for a crop they grow well,</li><li style="margin-left: 0.5in;">Growers will receive a higher price for this crop than other varieties of corn.</li><li style="margin-left: 0.5in;">Appalachian people who are not necessarily immersed in the &ldquo;locavore&rdquo; movement and diet, will respond to a product as Appalachian</li><li style="margin-left: 0.5in;">INcrease market access for Shagbark Seed &amp; Mill&#39;s other products, as well as for other Appalachian products, in the Appalachian Region.&nbsp;</li></ul><p style="margin-left:.5in;">This popcorn is perfect, not only because it is a crop that is commonly grown and enjoyed in Appalachia, but also because of its agronomic characteristics. Popcorn is more frost-hardy in its early stages than dent and flint corns, which means it can be planted earlier and matures before the autumn rains which are notorious for producing mycotoxins in maturing corn. The quality of this crop is excellent, and the disadvantaged farmers of Appalachia can produce it much more easily than other crops that we deal with. Other farmers in the Chesterhill community have approached us over the years, asking if they could put any acreage into production of some crop for us, so we are confident that we can find the production base to support a significant demand.</p><p style="margin-left:.5in;">Indirect impacts include</p><ul><li style="margin-left: 0.5in;">Increased revenue brought by this high-quality value-added product to support the fiscal sustainability of a business that is working on a replicable model for rebuilding regionally appropriate staple food systems.</li><li style="margin-left: 0.5in;">Shagbark Seed &amp; Mill brand awareness would be increased, as the company reaches a broader audience with an accessible, ready-to-eat product.</li><li style="margin-left: 0.5in;">The bagging machine that would be required for this operation is likely to be applicable for other products, perhaps making our bean, grain, and flour bagging operation more efficient and allowing us to lower our prices on those products.</li><li style="margin-left: 0.5in;">Finally, this machine would certainly bring us one step closer to producing our tortilla chips in-house, a process that could start with small batches using special corn and recipes, and perhaps graduating to the ability to entirely capture that value chain within Appalachian Ohio.</li></ul><p style="margin-left:.5in;">All of these indirect impacts would also indirectly support the aforementioned work on food access and food security that is being pioneered by Shagbark. Additionally, there has already been some work on establishing distribution chains between southeast Ohio and West Virginia, and the funding and energy in this project can have an indirect impact on that effort, strengthening the commercial links between Southeast Ohio and the rest of the CAN region.</p><p style="margin-left:.5in;">&nbsp;</p>

Workload

<ol><li>Our preliminary outreach to a company that produces bagged heirloom popcorn suggests that we should conduct market research and build the market at the front end, by sampling the finished popcorn and the brand to build the market before we invest in building the processing system.</li><li>We&#39;ve successfully doubled the acreage of popcorn for this growing season in the Chesterhill Ohio farm community where we already work with growers, our preliminary discussions with new Appalachian farmers suggest that we can plan more acreage for next season by conducting outreach in the late fall and early winter.</li></ol><p>Market Research: Michelle Ajamian, SBDC, Shagbark Stafff, design consultants, Network</p><ul><li>Sampling product in stores, gathering data on customer response to popcorn, packaging, and brand. 120 hours</li><li>Label mock-ups-25 hours</li><li>Running a test-batch of popped product through a form/fill/seal bagger to prove the process and provide bagged product to sample-not sure of time and costs</li></ul><p>Farm Outreach: Brandon Jaeger, Network</p><ul><li>Conducting farmer outreach, communications, and education-10 hours</li></ul><ul><li>Identifying, developing and assessing a foundation of farmer-partners for this potential product line-10 hours</li></ul><ul><li>Conducting interviews with two of our current popcorn farmers, and submitting the interviews to publications identified by partners such as the localfoodsystems network, the Central Appalachian Network,&nbsp; Ag Extension, and Community Farm Alliance, as serving readership in Appalachian Ohio, Kentucky, and West Virginia 40 hours</li></ul><p>Facility Planning/Research: Brandon Jaeger/Michelle Ajamian, SBDC, ACEnet</p><ul><li>Research equipment and currently existing popcorn facilities-10 hours</li></ul><ul><li>Travel to at least one existing popcorn facility-2-3 days-Ajamian, Jaeger, and Shagbark staff</li></ul><ul><li>Hire a consultant (either an engineer/machinist we already work with, or an expert we identify through our initial research) to help determine appropriate machinery and facility layout. -time involved unclear</li></ul><ul><li>Determine total capital cost and cost of production-ACEnet, SBDC</li></ul>

Mapping

<ol><li>Growing the popcorn: Farmers in Chesterhill and other parts of the Appalachian Region.</li><li>Marketing the brand: We will be testing the popped product once we purchase and installl a small popper a the facility that makes our chips and crackers to test a small batch to get out as samples. Mock up labels will be printed and tested as well.</li><li>Sourcing Oil: Ideally, an oil that can be a seed crop in our region. We would start out purchasing oil, likely sunflower oil. We hope to partner with Carbon Cycle Engineering to have oil pressed locally, and grown by our region&#39;s farmers. Carbon Cycle is going to launch a biz case for their oil project on this site and we will link this project to their concept. There is also an oil project underway at Mellinger Farm that might be a good source.&nbsp; We have found a source for organic sunflower oil from Wisconsin in the meantime.</li><li>Developing labeling with nutrition facts, upc, etc.</li></ol><p>&nbsp;</p><p>&nbsp;</p><p>&nbsp;</p>

Required Resources

<p>We are working with the Central Appalachian Network to fund the initial market research, farmer outreach, and systems design for this project.</p><p>We are seeking farmers from Southeastern Ohio / Chesterhill area to produce the popcorn. We will purchase it for use in this value-add development project</p><p>We are working with Dwight Mitchell of Carbon Cycle Engineering on his oil pressing project.</p><p>We <strong><u>have</u></strong> relationships with several engineers, designers, and fabricators, whom we have hired for our various infrastructure installations and upgrades, and we will call on one or more of them to help us install the popping line.</p><p>We <strong><u>will be</u></strong> relying on well-established relationships with the four distributors and&nbsp;<strong>numerous </strong>retail stores in Ohio and West Virginia, our beloved market partners, to help with marketing and telling the story of this new product equipment into our existing production floor, and to carry out any retrofits required for smooth operation.</p>

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