Eden Farms LLC
Eden Farms Sees Decade of Growth, Success
After 10 years in business, Eden Farms founder Kelly Biensen of State Center, Iowa, can say his specialty pork business has been profitable every year since its beginning. Factors at play in the commodity pork industry in 2008 are creating some new hurdles for the specialty producers, however.
Eden Farms products are primarily Certified Berkshire Pork, naturally raised and known for premium taste qualities. Producers raise Berkshires to market into high end restaurants located coast-to-coast and some retail establishments. The Eden Farms independent family farmer coalition is the largest supplier of 100 percent heirloom Berkshire pork in the country.
“Overall, business has been very good,” said Biensen. “This year, we are struggling a bit as our producers are facing higher input costs. We’ve had to ratchet up pricing on products.” Commodity pork is paying about 50-cents a pound, while the producers with Eden Farms are getting 68-71-cents (September 2008) with hopes to move the producer price to 70-73 cents in October.
Twenty-six producers are part of the Eden Farms, LLC. The start-up producer partners were the husband-wife team of Kelly and Nina Biensen.
As Biensen and his producers adjust to maintain profitability, several initiatives are in the works:
The Eden Farms, Naturally Good Food trademark was purchased. It probably will become another LLC. “We’ve tossed around some ideas. We have control of both of the entities now. Eden Naturally may still be our company name, but we do business as Eden Farms.”
The Eden Farms label is changing as well, as the understanding of “natural” and “all-natural” have shifted. All-natural is deceiving, he explained. If a product is not all-natural and uses some antibiotics, the label can say “minimally processed” and “no artificial products are used.” Biensen said the spiral sliced hams and cured ham hocks are free of growth hormones, but aren’t able to say all-natural. This conflict was causing some confusion among customers.
The word “natural” doesn’t mean much, he continued. Eden Farms is working with producers to get them moved to no antibiotics. Biensen said one producer – with 300 sows – uses no antibiotics. “If we continue this trend that’s the way we want to go. It’s better for the environment.”
Prior to 2008, about 30 pigs slaughtered every other week were antibiotic free, or ABF. “We call them never-ever pigs.”
Biensen admitted he and his wife started the business, “not knowing what we were doing.” They thought they would market pork from cross-bred pigs – all were Berkshire Gold or 50 percent Berkshire.
Genetics became a focus. They began experimenting to see what percentage of Berkshire was necessary to boost profitability. They hoped to enable producers to get more pigs per litter than Berkshires have. Typically, he said, producers get six to seven pigs per litter. The Biensens also looked at what hybrids would have better vigor, mothering traits and weight/feed traits. At that time, Nina was finishing work on a Ph.D. in reproductive physiology.
Through various trials, they discovered that mothering traits were 10-15 percent heritable; bone quality traits were 60 percent heritable; and weight and feed traits were 25-40 percent heritable. Other factors were investigated as well.
“I was cultivating a stronger maternal line. One of our growers, under my direction on genetics, has been able to raise an average of nine pigs per litter on purebred Berkshire pigs,” he said.
At the same time, he noted, competition was increasing, with new companies entering the picture. Some would advertise as Berkshire, but weren’t always 100 percent Berkshire. “Our producers were already using breeding stock that was registered with the American Berkshire Association. The process evolved for us.”
Eden Farms is composed of small-farm producers. Biensen said two have 300 sows, another has 240, another 100; then the sizes go down to fewer than 100, even as low as 10 sows.
The LLC has steadily grown output, and Biensen is hopeful that some products that have been in higher demand will continue that way. The number of hogs slaughtered has ranged from 200 to 300 per week, with last year’s average at 214 a week. Last spring, slaughter numbers were at 1,200 head a month. Now, however, the number is down. Some of the loss may be the result of this year’s price hike, Biensen said. “By raising our price, we lost one distributor. Let’s say a distributor sells to 20 restaurants; if five decide they aren’t taking the higher prices, it makes a difference.”
Two of his distributors are very strong in retail, but retail, too, is down. Eden Farms has 10 distributors spread across the country.
Biensen said the price hike was “absolutely necessary.” Last spring, commodity product pricing jumped up twice, which was good for Eden Farms producers. Then corn rose from around $3 to $8 a bushel, so the edge was lost.
The group waited to raise prices for awhile and designed the increase so that it wouldn’t have to make additional changes too rapidly. Biensen said he spoke to chefs and owners of businesses at the time of the increase to help them understand.
In the meantime, Biensen said his company is looking into some other types of relationships. “I want to expand our base, sell more value-added products and exports. We finally exported this year, sending meat to a Japanese groups two times.”
He still goes out to meet with U.S. customers, but now goes with his distributors as a product representative.
The company received assistance from the Value Added Producer Grant program at three stages, beginning with doing feasibility and creating a business plan for the business in its early stage.
About USDA VAPG
VAPG funding has been offered by the USDA periodically since the early 2000s. A new round of funding is anticipated to be announced in the coming months. To be considered value added, projects must show how products are differentiated in specific ways from commodity crops. Typically, projects must also show how they may deliver greater returns to producers.
Independent producers, farmer or rancher cooperatives, agricultural producer groups, and producer-owned business ventures, including non-profit organizations, may apply. In previous cycles, applicants were required to be producers of the raw commodity who will maintain ownership of that commodity through the process of creating a value-added product. Grants have been available for planning projects (such as marketing and business plans and feasibility studies) and working capital projects (which might include wages or packaging supplies). (http://www.rd.usda.gov/)