Make more from the food you grow

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A row of bushel baskets filled with peaches at a farmer's market. (Photo courtesy of The Alabama Cooperative Extension)

AUBURN UNIVERSITY – Each growing season, producers must decide how and where to sell their crops. Farmers markets, grocery stores, roadside stands and wholesale distributors are excellent established options; however, there are new opportunities to consider. Charitable donations and second-generation uses of fresh fruits and vegetables have opened more markets for local producers.

Donate to a charitable organization

Donating extra fruits and vegetables to a faith-based group, food pantry or other charitable organization has always been a worthwhile cause, but it has provided little tax benefit to the donor. As of the 2020 tax year, producers working with a qualified 501(c)(3) organization can deduct an amount calculated on 25 percent of the fair market value of the donated products.

To take advantage of the provision, producers must adhere to guidelines, including food that meets standard federal, state and local laws and guidelines, even if it is not salable because of its age, appearance or freshness. In addition, the charitable or nonprofit organization must give the producer documentation including a description, date of donation, intended use of products, affirmation of compliance with federal donation and 501(c)(3) laws and assurance that the organization’s records will be adequately maintained and available to the IRS upon request. This should not be an issue for most 501(c)(3) organizations.

The overall deduction per year is limited to 25 percent of a farm’s net income. Any donation beyond that amount can be carried over and claimed for five years from the time of donation. Producers must determine whether itemizing deductions or taking the standard deduction is most beneficial. It is a good idea to consult an accountant or your local Extension office to determine how the provision affects you.

Sell to breweries, wineries and distilleries

Produce grown in the state is often sought by local breweries, wineries and distilleries. Although these businesses typically use only fruits in their processing, this is not absolute. A wide variety of products may be used, depending on the operation, location, season and other factors. Popular Alabama crops include peaches, strawberries, blueberries, blackberries, apples, citrus, melons, plums, muscadines and pecans. Producers should contact individual businesses to learn their particular production needs.

How much produce can a producer expect to sell? For beer and wine flavorings, the quantity won’t be huge, but one advantage of these markets is that fruit can be used beyond its salable date at the farm or local market. Consumers can be picky about the appearance of produce, but that does not diminish its quality.

Distilled products, such as brandy and spirits use a much greater quantity of fruit, with several distilleries located in Alabama. Producers are generally responsible for getting their crops to the business. One method is to arrange with the distiller to drop off produce after a day at the local farmers’ market. Producers are generally paid in line with wholesale prices, which creates a great opportunity for farms to profit from produce that will be unsalable in the near future.

Make products using a commercial food kitchen

Another option for using unsalable produce is to make value-added products such as jams, barbecue sauce, savory sauces, fruit sauces, pickles and frozen pie filling. The Chilton Food Innovation Center (CFIC), managed by Alabama Extension, is a shared-use food processing facility in Clanton, Alabama that helps fruit and vegetable producers become processors without having to equip their own commercial kitchens.

The 2,000-square-foot building contains processing and packaging equipment, a small office, storage space and sanitation supplies. Facility fees are $40 an hour.

There are different methods for getting products made. One option is to hire a copacker to make the product for you. Another is to become a food processor yourself. This option requires more training, but it also allows for more quality control. Either way, there are startup costs. Keep in mind that the costs associated with production can be covered by risk diversity and additional sales, as these products can be sold at markets throughout the year.

Christy Mendoza, an Alabama Extension regional agent and food scientist, is available for consultation throughout the startup process. For more information, contact the CFIC at (205) 280-6268 or visit their website at http://www.chiltonfoodinnovationcenter.com/.