Garry Stephenson, Oregon State University
Larry Lev, Oregon State University
Farm direct marketing involves selling a product from the farm directly to customers. Often, the farmer receives a price similar to what the grocery store charges. This method of marketing is more entrepreneurial or business-like than wholesale marketing. In a manner of speaking, the farmer using this method grows a “product” more than a crop. The opportunity to interact with growers is one of the reasons consumers like to purchase this way. The experience of the purchase is often part of the product.
Here sales to restaurants, retail stores and institutions are included among farm direct marketing approaches because the farmer has some control over the price and the transaction is based on a relationship with a business owner or manager. Pricing varies and may be higher for sales to restaurants, but lower for grocery stores and schools.
There are a variety of advantages to farm direct marketing:
- Since small quantities of farm products can be sold, small producers can participate.
- The farmer sets the price or is more control of the price. Good products and services can get attractive prices and therefore, small farms can be profitable.
- Payment is usually immediate.
- In addition, farmers receive instant feedback from customers on products and service. The farmer can improve his/her business through this input and increase farm profitability.
Farm Direct Marketing Challenges
Since a farm using direct marketing is responsible for what it grows and how and to whom it markets its products, risk is much higher than it is for farms using wholesale markets. Farm direct marketing is equivalent to starting a small business in addition to the farm.
Using farm direct marketing, the farmer takes on new roles and becomes responsible for marketing, retailing, advertising, customer relations and so on. The method requires the personality and patience to work with people: the farm’s customers. There are also regulations that pertain to farm direct marketing that other farms do not worry about. Lastly, even though the potential for profit is much greater for small farms marketing directly, there is no free lunch. This approach will require long hours to produce crops, service customers, keep up with competition, and more.
Selecting What Crop or Product to Sell
Deciding what to sell is an integral part of marketing; especially farm direct marketing. Farm direct marketing is closely related to the concept of “niche marketing.” Niche marketing is producing a product that differs somehow from what others are growing. Through its uniqueness, the product fills a niche or gap in the market. Niche marketing provides a customer base for sales and allows the farm the ability to more closely control the price for the product. Niche marketing is counter to the traditional approach to agriculture in which commodities that are virtually all alike are marketed to “everyone.” Instead, a specific product is marketed to a specific segment of the population that desires it and is willing to buy it.
It is crucial to remember that the character of a niche market is that it may fade over time. Successful niches often attract other producers, thus diminishing its uniqueness. The entrepreneurial aspect of farm direct marketing requires always looking for new niches.
When considering what products to focus on, begin by looking at things from the perspective of the consumer. Get to know your customers. Figure out what they want and are willing to pay for, and then produce it. This will involve at least some basic market research. Take into consideration lifestyle trends related to food (convenience, health, safety, freshness), the ethnic and racial make up of the population you are reaching and their food preferences, age and income of buyers, and the amount of competition from other producers.
Sometimes farmers focus on specialty crops. These crops are rare, unusual or simply aren’t available locally. Some crops that were rare at one time but are common now include miniature vegetables, salad mix, and fresh culinary herbs. Specialty crops may have a good potential market.
However, often the right products to offer are quite common but with something special added. This addition makes the product unique and more valuable. For example:
- Service—added convenience, delivery, portion size, and so on
- Exquisite quality, appearance and flavor
- Production practices—organic practices, protecting water quality, or fair treatment of labor
- Special experience for the customer—from a pleasant experience visiting the farm to hayrides to pick out pumpkins, customers love being associated with farms
- Your wacky personality or magnetism—if you are particularly likable, charismatic, or a character, customers often prefer returning to a farmer with whom they enjoy interacting.
Farm Direct Marketing Resources
- Marketing and promotion resources: leveraging existing programs and resources [Online]. D. Thilmany and K. Curtis. Western Extension Marketing Committee. Available at: http://www.valueaddedag.org/nichemarkets.html (verified 30 Nov 2015).
Before considering your own promotional strategies, it may be useful to look at all the public, shared and industry level resources that already exist, that provide low-cost or strategic partners that allow you to use your marketing resources the most effectively.
- Marketing local food. 2007. Minnesota Institute for Sustainable Agriculture. (Available online at: http://www.misa.umn.edu/Publications/MarketingLocalFood/index.htm) (verified 4 April 2011).
Marketing Local Food is a handbook designed to help Minnesota farmers explore the various options for marketing local food. It introduces the basics of different marketing systems, suggests resources and includes profiles of farmers who are selling farm products directly to consumers via farmers' markets, roadside stands, CSAs, on-farm stores; as well as information and profiles about selling indirectly via retail food establishments or food services.
- Wisconsin local food marketing guide: A producer's guide to marketing locally grown food, Second Edition. 2011. Wisconsin Department of Agriculture, Trade and Consumer Protection. (Available online at: http://www.wistatedocuments.org/cdm/singleitem/collection/p267601coll4/id/3152/rec/4) (verified 14 Mar 2014).
- Getting Started: Selecting a Market, Developing Your Plan
- Direct Marketing: Producer to Consumer
- Intermediate Marketing: Producer to Buyer to Consumer – e.g. selling to restaurants and institutions
- Market Development
- Pricing Products for Various Markets
- Licensing, Labeling, and Regulation Requirements
- Food Safety, Food Liability, and Farm Insurances
- Organic price reports for wholesale and direct sales [Online]. Maine Organic Farmers and Gardeners Association (MOFGA). Available at: http://www.mofga.org/Default.aspx?tabid=260 (verified 5 Mar 2010).
In 2006, MOFGA (Maine Organic Farmers and Gardeners Association) began regular surveys of prices charged by MOFGA certified organic farmers in Maine for both direct sales and wholesale sales (usually natural food stores and restaurants). These are published as a service to the organic farming community. Your comments on how to improve the survey and your participation are welcome.
- Illinois MarketMaker [Online]. University of Illinois Extension. Available at: http://il.foodmarketmaker.com/ (verified 5 Mar 2010).
MarketMaker is an interactive mapping system that locates businesses and markets of agricultural products in Illinois, providing an important link between producers and consumers.
- Farm marketing, business, and risk management resources [Online]. ATTRA - National Sustainable Agriculture Information Service. National Center for Appropriate Technology (NCAT). Available at: http://attra.ncat.org/marketing.html (verified 5 Mar 2010).
A list of numerous publications related to farm direct marketing and business management.
- Direct marketing (summary) [Online]. K. Adam, R. Balasubrahmanyam, and H. Born. 1999. ATTRA - National Sustainable Agriculture Information Service. National Center for Appropriate Technology (NCAT). Available at: http://www.attra.ncat.org/attra-pub/directmkt.html (verified 5 Mar 2010).
This publication from ATTRA on direct marketing alternatives—with emphasis on niche, specialty and value-added crops—features many farm case studies, as well as information on enterprise budgets and promotion/publicity.
- Organic marketing resources [Online]. H. Born. 2004. ATTRA - National Sustainable Agriculture Information Service. National Center for Appropriate Technology (NCAT). Available at: http://attra.ncat.org/attra-pub/markres.html (verified 5 Mar 2010).
Market resources for organic products, including prices, sales data, market trends, and other data, organic trade associations, directories, and other organic marketing publications and resources.
- Farmer direct marketing bibliography 2001 [Online]. J.V. Klotz. Agricultural Marketing Service, United States Department of Agriculture. Available at: http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRD3245670&acct=wdm...
- Wholesale and farmers markets publications and presentations [Online]. Agricultural Marketing Service, United States Department of Agriculture. Available at: http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=Templa... (verified 5 Mar 2010).
Browse a list of articles relating to direct marketing from the Agricultural Marketing Service of the USDA. This provides a listing of publications and resources to assist with the development of direct marketing strategies.
- Farmers market consortium [Online]. Agricultural Marketing Service, United States Department of Agriculture. Available at: http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=Templa... (verified 5 Mar 2010).
Here you can find a link to the Farmers Market Consortium: Resource Guide.
- The legal guide for direct farm marketing. N.D. Hamilton. 1999. Drake University (Available to order at: http://directmarketersforum.org/the-legal-guide-for-direct-farm-marketing/) (verified 5 Mar 2010).
"This book provides answers directmarketersforum.org/the-legal-guide-for-direct-farm-marketing/ to legal questions commonly posed by direct marketers and their advisers. It includes specific examples of court cases, state laws, and local regulations involving direct farm marketing. Some chapter headings include Contracts, Food Stamps and Getting Paid, Land Use and Property Law, Labor and Employment, and Insurance and Liability. A thorough legal reference book."
- Alternative Farming Information Systems Center (AFISC) [Online]. United States Department of Agriculture. Available at:http://afsic.nal.usda.gov/ (verified 5 Mar 2010).
The AFISC has compiled resources to assist with direct marketing, including a curriculum for teaching direct marketing to students in agriculture.
- North American Farmers Direct Marketing Association (NAFDMA) [Online]. Available at: http://www.nafdma.com/ (verified 5 Mar 2010).
NAFDMA is an association dedicated to nurturing the farm direct marketing industry. NAFDMA members include farmers, market managers, extension agents, industry suppliers, government officials, and others. NAFDMA is a networking resource and organizes an annual North American Farmers' Direct Marketing Conference and Trade Show.
- Value-added agriculture & Western Extension Marketing Committee [Online]. Available at: http://www.valueaddedag.org/nichemarkets.html (verified 30 Nov 2015).
Western Extension Marketing Committee website provides materials for those considering a marketing approach that target niche products, including organics.
This is an eOrganic article and was reviewed for compliance with National Organic Program regulations by members of the eOrganic community. Always check with your organic certification agency before adopting new practices or using new materials. For more information, refer to eOrganic's articles on organic certification.