Hobby farm turns into viable business

Grace Harbor Farms finds market niche

Text and photos by Taylor Williams

Members of the Grace Harbor herd greet visitors to their Custer farm.

Tim and Grace Lukens bought two white Saanen goats in the fall of 1999. They never planned on producing goat’s milk, goat’s milk soap or any other number of products Grace Harbor Farms creates and sells today. They purchased the goats at a precautionary measure against Y2K, just in case the rumors were true.
“My wife came home one day,” Tim Lukens said, “and she said, ‘There may be something to it (Y2K). What do you think we get a couple of goats just in case? We can drink their milk, we can make cheese and we can eat them if we have to.’”
When the year rolled over, the Lukens never ate their livestock. Instead, they made some cheese and discovered they really liked goats. “They were a kick,” Tim said, “We had discovered a hobby we enjoyed very much. We found out that the milk, goat milk, if it is fresh and clean, tasted good, too. So that’s what got us going.”
The Lukens were not satisfied having a few animals hanging out as a hobby. They researched different ways to use the milk, so that the hobby might pay for itself. The first product the Lukens made from the milk was soap and Grace Harbor Farms blossomed into existence.

Starting out
Grace became the inventor; creating and perfecting soap recipes. “I like to create the product. I am very interested in the process and the experimentation,” Grace said. All of the health and beauty aid products Grace Harbor Farms sells are made from recipes Grace created.
While Grace worked on recipes and Tim worked on selling the product wholesale to the Bellingham Community Food Co-op and other outlets in the area. “What I brought to the partnership and relationship was a retail marketing background,” Tim said. “We both have business experience, so we put that together.”
Tim soon found out that wholesale buyers were not receptive to his new goat milk product. “I pursued selling our soap that way for January, February and March with hardly any success at all,” he said. “We almost decided to quit and bag the whole thing, because it just wasn’t selling.”
It was at these early stages in the business that the Lukens responded to a friend’s suggestion of opening a tent at the Saturday farmers market in the spring of 2000. “I give the farmers market venue, basically, the credit for the reality that this company is still around,” Tim said. “What we found out was, there is a customer out there that wants a natural product and they shop the farmers market.”
At the end of the market season, customers asked the Lukens where they planned to set up shop after the farmers market ended. Responding to the pleas of their customers, Tim and Grace opened a kiosk in Bellis Fair Mall. “We decided to test the business by taking it into the highest traffic and highest overhead we could find,” Tim said.
They opened the Grace Harbor Farms kiosk in October 2000, and kept the kiosk for three and a half years. “The first month in the mall was a disaster,” Tim said. The store was hardly making enough money to cover rent and the Lukens were receiving nothing for their labor.
“I realized when you are open seven days a week in a mall setting, versus one day a week in a market setting, the attitude of the customer is, ‘Oh well, you are there seven days a week. I don’t have to buy from you today. I may come back tomorrow, I may come back the next day, I may come back next week,’” Tim said.
“But the farmers market, when it is only six hours one day a week, a person coming to the farmers market is coming with money in his pocket with the attitude, ‘I’m going to buy something today.’”
Tim believes the exposure at the mall was valuable to develop the company’s brand name. “It ended up being a valuable marketing investment,” Tim said, although the cost of renting the kiosk kept the net profit at the break-even point, he said.
Grace Harbor Farms closed down its Bellis Fair kiosk to pursue other ventures. Now the store resides behind their home, next to the farm. Their other store is located on their Web site. “The Internet is becoming more important to us every year,” Tim said. “Each year the percentage of income we get off the Internet grows. It’s a marvelous tool.”
All of Grace Harbor’s health and beauty aid items are sold on the Web site. “We are going to see continued growth because of the Internet base,” Tim said. “Grace has spent a lot of time this last year learning how to do a better job with her Web site, so I hope to see double-digit growth for several years to come.”

Growing the company
This past year, Tim and Grace decided to split Grace Harbor Farms into two separate companies. The soaps, lotions and skincare items are under Grace Harbor International, owned and operated by Grace, with Tim as the vice president.
Grace Harbor Farms, Inc. is the animal-based side, with Tim as the owner and president, and Grace as the vice president.
Both companies are currently working on new products for their customers. Grace Harbor International, which grew by 50 percent last year, offers a lotion with MSM, an organic sulfur compound believed to be an anti-inflammatory and used to relieve chronic muscle pain. The MSM cream is Grace Harbor International’s highest selling product, Grace said.
The idea to incorporate MSM into her creams and lotions came to Grace while she was suffering from plantar fasciitis, severe pain in the heel of the foot caused by inflammation. “I was wheelchair bound for about four months and a friend of mine suggested I try MSM supplements,” Grace said. “Some places were already selling it in lotions, but I thought, ‘Well, I’m a cream maker, I’ll just make my own.’”
Grace gets the MSM in a crystal form and adds it to her lotions that already contain goat milk and essential oils. Her newest development will be an MSM massage cream. “We have had enough people asking,” she said, “so we are going to develop a massage cream specifically for massage therapists that will contain all of the current ingredients, but adding some to make it for massage.”
On the dairy side, Grace Harbor Farms, Inc., Tim spends most of his time bottling milk and yogurt for distribution. He drives to Seattle once a week to deliver the dairy products. Grace Harbor Farms is a Grade A certified dairy and sought out that status in order to make cheese.
The Lukens made cheese for approximately a year and a half, but stopped when there was not enough milk to bottle and make cheese both. “Cheese making is more of an artisan thing,” Tim said. “I am not a fan of producing cheese, so it was an easy decision to me.”
This year, the farm is emphasizing yogurt products and plans to have a gourmet yogurt with live probiotic cultures out on the market by June. “We are going to collaborate with other local businesses for the flavors,” Grace said.
She has already begun experimenting with coffee from Moka Joe and also hopes to use Edison Breadfarm’s peanut butter for flavor as well. “We are looking for a raspberry farm right now, for raspberry yogurt,” she said.

Surviving a close call
Tim is watching his dairy farm bounce back from setback in September 2006, when he received a phone call that two children in Seattle were diagnosed with e coli and the only link the department of health could find was Grace Harbor Farms’ raw milk in the refrigerators.
The farm never had any finished bottled milk test positive for the pathogen, but were linked to the sickness from two samples, one in the manure and one out of the bulk tank. “According to DNA evidence, we were the source. I can’t dispute that,” Tim said.
The litigation brought against the Lukens will be settled later this year, he said, and they don’t plan to produce raw milk again. “From a business perspective, if you can make a mistake, with proper labeling on your bottles, be fully licensed by the state of Washington and still be sued, and none of that stuff makes a difference,” Tim said. “[To] literally have a law firm pull hundreds of thousands of dollars above the medical expenses out of your insurance company, that just represents too much risk.”
Grace Harbor Farms has approximately 60 goats and Tim plans to downside the herd. “We are going to settle down into a niche that’s functional and profitable,” Tim said. ”As consumers ask for products that we can produce profitably, we’ll consider growing again. We are just breathing a big sigh right now that we exist.”

Tim Lukens pets a couple of his goats on the farm, which is located behind the Lukens’ house. Tim said he enjoys raising goats because they have a lot of personality.





Grace Lukens began selling her lotions and soaps made with goat’s milk at the Bellingham Farmers Market. Now she also sells them at her farm store and online.