With the support of the Minnesota Institute on Sustainable Agriculture, PastureLand has made significant progress toward its goal of establishing a new dairy cooperative that will market grass-based dairy products.

Since early 1999, a core membership group and operating principles have been established. Research has been conducted related to marketing grass-based dairy products. Co-packing relationships have been established with Eichten's (cheese) and the Hope Creamery (butter). These products have been successfully test-marketed through direct sales (farmer's markets) and retail outlets.

Based on these successes, PastureLand has developed a preliminary business plan and sales and marketing strategies. This document will serve as the final report for PastureLand's MISA grant, and will document our experience/research and future plans for the following areas: membership and standards, market research and strategy, brand and logo development, and packaging and distribution.

Membership and Standards:
PastureLand filed Articles of Incorporation with the State of Minnesota in April of 1998. The group's membership is currently comprised of six families on four farms, all of whom are strongly committed to the success of the co-op. PastureLand intends to monitor and control the number of members in the cooperative, particularly during the coming years of business development. Maintaining a relatively small membership will enable the cooperative to better understand and control its product output, inventory systems, and financial projections.

Each member farm utilizes a management-intensive grazing (MIG) system. MIG and its health benefits to animals, consumers, and the environment is the cornerstone of PastureLand's production standards and marketing efforts. The human, animal and environmental health benefits of grass-based dairy systems will be presented to consumers as an alternative to conventionally- and organically-produced products.

PastureLand's Production Standards (attached) are rooted in MIG and detail expectations for member-farmers with regard to animal feed, living conditions, herd health, and bringing new animals onto the farm. These standards are a result of both market research and the preferences and beliefs of members of the co-op. PastureLand anticipates that these standards could continue to be refined in coming months as more is learned about the preferences of consumers. PastureLand is also committed to providing educational opportunities for its members as they work to meet these standards.

One of the primary motivations for the creation of PastureLand was to enable farmers to realize increased profitability from an ecologically- friendly method of farming. This principle has been incorporated into all facets of the cooperative, from PastureLand's price structure to its marketing materials.

Market Research

PastureLand has used research, contact with consumers, and consultation with animal and human health experts to conduct market research. We feel that we have a clear picture of the market for our products and the ways in which we will seek to appeal to that market.

Though organic dairy products have enjoyed a surge of popularity over the past several years, grass-based dairy products are only beginning to enter the market. Only a handful of dairies in the United States are marketing grass-based dairy products. As such, PastureLand is something of a pioneer in this area.

Fortunately, there is a growing body of scientific and academic knowledge to support our marketing efforts. This research primarily concerns conjugated linoleic acid (CLA) and omega-3 fatty acids.

CLA is an essential fatty acid that is found only in animal products. Research at the Universities of Wisconsin and Utah, among others, has linked consumption of CLA with a reduction in the development of tumors and the risk of various cancers. CLA can also help the body to burn fat. Milk products from pasture-fed cows contain up to five times more naturally-occurring CLA than conventional grain-fed dairy products. Grass-fed dairy products also contain high levels of Omega-3 fatty acids, which are associated with healthy brain development and function and cardiovascular health.

PastureLand has emphasized these health benefits in its literature, and intends to continue to do so. Contact with consumers, however, has shown that many are most concerned about the used of antibiotics and hormones (such as rBGH/rBST) in dairy products. We believe that this concern stems from press coverage of these issues in recent months and years. We have taken steps to label and promote our products "rBGH-free", and have adopted a production standard prohibiting the use of antibiotics in adult dairy cattle.

Publicity and public education about the benefits of grass-based products has increased during the past year in part because of the work of two writers and speakers, Sally Fallon and Jo Robinson. Ms. Robinson has written a book entitled "Grassfed is Best" and hosts a web site entitled "Eat Wild" (www.eatwild.com). Both provide very readable information for consumers who are interested in grass-based products.

Ms. Fallon has formed the Weston A. Price Foundation (www.WestonAPrice.org), whose mission is to educate the public about the nourishing value of traditional foods. Ms. Fallon speaks to groups across the country on a regular basis and emphasizes the nutritional value of foods such as butter from pasture-fed cows. PastureLand helped to bring Sally Fallon to the 2001 Minnesota Grazing Conference, where she spoke to a group of 200+ farmers and consumers.

PastureLand has received a great deal of market-related information from consumers at various farmers markets and food fairs and product demonstrations in Southeastern Minnesota. We were able to engage in conversations with consumers, who provided us with feedback about our product and their priorities for the food they consume. In rough order, consumers have told us that their priorities are as follows:

1. A premium, good-tasting product.
2. A locally produced product
3. No antibiotics or hormones-a relatively small number of consumers expressed this concern, but it was a high priority for those who did.
4. Price
5. Small family farms

We have incorporated all of these consumer priorities into our literature (see brochure, attached), advertising, point of sale materials, and other publicity.

We look forward to learning about local and regional differences in priorities, especially as we begin to sell our products through Twin Cities and Southwestern Minnesota retail outlets. Based on conversations with buyers from Twin Cities-area natural foods stores, we believe that hormones, antibiotics, and humane treatment of animals will be higher priorities for Twin Cities consumers than for those we've served in Southeastern Minnesota.

Market Strategy:
Having spent nearly a year testing and identifying our markets, PastureLand has developed a marketing strategy designed to maximize efficiency and to reach consumers who are most receptive to our products.

PastureLand's experience at the Rochester Farmer's market and other food fairs has helped us to build brand recognition and a regional customer base, as well as to conduct market research. The farmer's markets are also very time consuming, however, at a very busy time in the farm year. We will continue to participate in local food fairs and will consider marketing our products at the Rochester Farmer's market, but hope to build a larger wholesale sales base.

We are now selling cheese and butter through several retail grocery stores and restaurants. These include the Good Food Store in Rochester, Hy-Vee North and Hy-Vee South in Rochester, Bluff Country Coop in Winona, Oneota Co-op in Decorah, IA, and Seward Community Co-op in Minneapolis, as well as Rebecca's, and Tavern on the Green restaurants in Plainview. We have found this to be a more efficient way of delivering our product to customers. We continue to provide product samples and demonstrations in grocery stores as a means of connecting with consumers and building brand recognition and retail sales.

In coming months, we will continue to target three market segments. The first and most numerous are health-conscious consumers who purchase organics and/or patronize food cooperatives or health food stores. The second market segment will be connoisseurs of premium cheese and dairy products. Finally we hope to "move" the market by targeting consumers who are open to learning about the benefits of locally produced, grass-fed products (for example, parents of young children). The first two groups are most important to the initial viability of PastureLand, but the latter group will be essential to fulfilling the mission of our enterprise.

To assist in reaching all three markets, PastureLand will develop and employ the following tools: product demonstrations and participation in food fairs/local festivals, development of a web site, a revised brochure, feature articles in a variety of newsletters and newspapers, point of sale materials, and a limited amount of paid advertising.

Brand and Logo Development:
A critical part of our business development has been the development of the PastureLand brand and logo, which appears on the first page of this report. PastureLand members developed the logo with the technical assistance of Insty-Prints. PastureLand members are enthusiastic about the logo, and preliminary consumer feedback has shown that it has been helpful in building brand recognition. We intend to use the logo on all future packaging and promotional materials.

Packaging and Distribution:
A significant part of our business development in the past year has been an increased understanding of inventory, packaging, and distribution systems and their potential impact on the success of our cooperative. As a result, our early plans for production of fluid milk have been tabled for the time being. Instead, PastureLand has put its energy into the production of value-added products that have fewer potential packaging, storage, and distribution hazards. Since mid-2000, we have been producing cheese in a co-packing arrangement with Eichten's cheese in Center City, Minnesota. We began making butter in a co-packing arrangement with Hope Creamery in Hope, MN in late 2000.

As a result of our co-packing and test-marketing experiences, we have learned a great deal about packaging, distribution, and sales. In recent weeks, PastureLand's Board and staff have concentrated on the development of sales and distribution strategies, including sales regions, personnel policies, and inventory control systems. These systems will facilitate the distribution and promotion of our products in Southeastern and Southwestern Minnesota and the Twin Cities.

Packaging has proven to be a significant challenge. Finding a source, designing packaging, and waiting for production of that packaging has been a challenge for each product. Understanding and complying with state regulations for labeling and packaging has also been somewhat cumbersome. Ultimately, we have been successful in finding, designing, and purchasing packaging for cheese (wrapped in random-weight wedges by our co-packer) and butter (waxed paper wrappers designed to our specifications). We have also taken steps toward the production of a half-gallon milk carton in anticipation of the time when PastureLand will market fluid milk.

Conclusion:
PastureLand is optimistic about its future and the opportunity to market value-added grass-based products to a local and regional market. Our test markets have shown that consumers will purchase these products at a price that will support sustainable family farms, and we will continue to actively provide educational materials about the benefits of grass-fed products.

PASTURE LAND STANDARDS
Revised February 12, 2001

1. Feed
   • Dairy cattle shall be fed at least 65% of their dry matter from MIG grazed forages during the whole of the pasture season.
   • Genetically engineered crops raised for livestock feed will not be grown on the farm. Lactating dairy cattle are to be fed non-GMO feed stuffs if practical.
   • Milk used for PastureLand products in the time of year when grazed forages are not available must receive a portion of forage from direct cut, non wilted, stored silage.
2. Living Conditions
   • Cattle are grazing animals by nature and shall have access to MIG pastures as the season and weather conditions permit.
   • When pasture is not available, cattle will have access to the outdoors.
   • Total year-round confinement of the dairy herd will not be permitted.
3. Herd Health
   • Sub-therapeutic antibiotic use is not permitted. Stock born on the farm and weighing less than 500lb. may be treated with antibiotics when necessary for illness. Above this weight, antibiotic use of any kind is prohibited, and treated animals must be removed from the program.
   • The use of hormones and steroids will not be permitted.
   • Sick and injured dairy cattle are to be cared for in a timely and humane manner.
   • In accordance with PastureLand's self-insurance policy, member farms that experience a serious outbreak of illness (widespread within the herd and requiring antibiotic use to prevent major loss of animal life or long-term health) must notify PastureLand immediately. Pending PastureLand Board approval, the member-farmer may treat affected animals with antibiotics. Antibiotic use in such cases will not be a cause for removing animals and/or farms from PastureLand, but milk from herds so affected will be sold on the conventional market for a period of one year after the last date of antibiotic treatment. No antibiotics may be used during this one-year withdrawal period. At the end of the one-year period, milk from the affected herd may once again be used in PastureLand products.
4. Purchased animals
   • Cattle purchased for dairy must be accompanied by a signed affidavit certifying that seller has not treated those animals with hormones or antibiotics for 60 days prior to sale.
   • Milk from purchased cattle must be tested before being sold to the Co-op.

PastureLand members (as of February, 2001)

Dan and Muriel French, Dodge Center, MN
Dan French is the President of the PastureLand Board of Directors.

Ralph and Phyllis Stelling, Millville, MN
Ralph Stelling is the Vice-President of the PastureLand Board of Directors

Roger and Michelle Benrud, Goodhue, MN
Roger Benrud is the Treasurer of the PastureLand Board of Directors

Bonnie and Vance Haugen, Canton, MN
Bonnie Haugen is the Secretary of the PastureLand Board of Directors

Jon and Mindy Kaiser, Goodhue, MN

Dennis and Ronda Stelling, Millville, MN

PastureLand staff Kirsten Bansen Weigle was hired in November of 2000 to provide part-time organizational support, including marketing, coordination and documentation of meetings, fundraising, and grant management.

Michelle Benrud was hired in February of 2001 to provide accounting and inventory control assistance on a part-time basis.

Doug Gunnink assisted with on-farm planning and business planning for PastureLand.