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Success in Sour Times: Network farming

By Stephen Samaniego | CNN | Jason Carroll - National Correspondent, CNN's American Morning

Fred Fleming's family has been farming in Lincoln County Washington for over a hundred years. President Grover Cleveland signed the deed to his great grandfather back in 1888. Since then the farm has been passed on from generation to generation. To say farming is in his blood would be an understatement.

Fleming jokes about how he used to be addicted to the traditional farming methods passed on to him by his father. "I'm a recovering conventional farmer. I'm ten years into my program. My name is Fred."

Fleming says this with a coy smile, but for years he worried about the sustainability of conventional farming. Traditionally, a wheat farmer sells his product on the commodities market where prices can be so volatile a farmer can be bankrupt before he knows what happened to him.

Fleming decided it was time for him to start selling wheat on his own terms. Fleming and his long-time friend and fellow farmer Karl Kupers decided to bypass the commodity market and take their product directly to the customer.

"We actually develop a relationship with our customer," says Fleming.

They were able to do this through forming Shepherd's Grain. It is a network of 33 farms that pool their resources, lock in a price with their customers ahead of time based on actual production costs and market their wheat as a team. Kupers says a fixed price allows farmers to better plan for their financial year allowing a farmer to know approximately how much profit they will be taking in each year.

"If you're going to be sustainable you at least have to cover your cost production. Agriculture doesn't play in that game," according to Kupers. "This is the uniqueness of Shepherd's Grain."

This business model has farmers waiting in line to join Shepherds Grain. Mike Kunz has been farming for 25 years and when the recession first hit, his farm was in financial trouble. He says after joining Shepherd's Grain two years ago, he was no longer vulnerable to the roller coaster commodity market and was able to create a sustainable business plan with his farm.

"It's a long-term plan. It's shown more popularity and I think its going to increase in the future."

Knowing what his profits will be each year has allowed Kunz to invest back into new farm equipment, making him more efficient and saving him even more money.

These days Fleming and Kupers spend as much time in their office targeting new customers as they do on their tractors. Marketing Shepherd's Grain has become a full-time job for both of them.

"How do I differentiate myself from the commodity market?" says Fleming. "Sort of like what Starbucks did with coffee. They put pizazz to it. What we're doing is we're putting pizazz to wheat."

That pizazz has attracted customers from across the pacific northwest, including Hearth Bread in Spokane. Monte Larsen, president of Hearth Bread, says the stable price and local connection were the biggest selling point when they were approached by Shepherd's Grain. Customers can trace every Hearth Bread product back to the farmer who grew it with a serial number provided by Shepherd's Grain. Hearth Bread puts that number on the packaging of their products and a customer can go online and meet the farmer who grew the wheat used to make the product.

"As we started marketing that around the area, sales have just exploded," says Larsen.

Fleming says this direct connection between farmer and consumer is the spirit of shepherd's grain.

"We've excited my customer base. And they truly are what have our future in our hands." says Fleming as he tears up. "When they buy products from us then they can truly impact the world."


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