-FAMILY FARMERS EXPLORE DIRECT MARKETING TO SECURE LONG
TERM SURVIVAL
-DIRECT MARKETING PUTS MORE MONEY IN FARMERS' POCKETS
-OBSTACLES PREVENT FARMERS FROM DIRECT MARKETING
_________________________________________________________
FAMILY FARMERS EXPLORE DIRECT MARKETING TO SECURE LONG-
TERM SURVIVAL
Reduced real commodity prices combined with rising farm input
costs, consumer demands for safe food and the continuing trend in
agriculture toward consolidation and contract farming have forced
many family farmers to search for marketing and production
alternatives.
Direct marketing is a successful alternative being explored by many
family farmers throughout the United States. A number of family
farmers have stopped selling to traditional marketplaces and instead
are processing flour, cereals, meats and dairy products. Farmers
then direct market these and other products, like vegetables, fruits
and herbs, to local consumers through retail operations, mail-order
catalogues, farmers' markets, and Community Supported Agriculture
(CSA) programs.
By direct marketing their products, farmers are able to pocket a
greater share of the food dollar by eliminating middlemen.
Middlemen, who include processors, distributors, wholesalers and
retailers, consume 74 percent of the food dollar -- leaving farmers
with an average of 26 cents in their pockets, compared to 37 cents in
1980, for every dollar spent on food at the store.
_________________________________________________________
DIRECT MARKETING PUTS MORE MONEY IN FARMERS' POCKETS
Farmers' Markets: Farmers' markets are one popular form of direct
marketing. In thousands of cities and towns throughout the United
States, over 2000 farmers' markets offer consumers a rainbow of
fresh fruits, vegetables, herbs and flowers at reasonable prices, while
giving farmers the opportunity to pocket 100 percent of the
consumers' food dollar.
Markets take place almost everywhere -- in church parking lots,
town squares, and roadside clearings. Some markets are organized
by farmer-run cooperatives while others are funded and set-up by
Chambers' of Commerce, city governments and non-profit
organizations. Markets range in size from a handful of producers
who gather one time a week to week-long markets with several
hundred producers.
Community Supported Agriculture (CSA): CSA is another form of
direct marketing practiced by growers. More than 400 CSA farms
are currently supported by members of local communities who buy
shares in a farm. In exchange for their investment of between $200
and $500 each season, share-holders receive weekly deliveries of
fresh produce from farmers, including fruits, vegetables and some
meats and herbs throughout the summer and fall. When customers
sign up, they are usually given an information packet and harvest
schedule.
Shareholders are required to make their investment prior to farmers'
planting season. This arrangement provides farmers with the
needed capital to purchase spring planting inputs.
In addition, by paying in advance of delivery, customers share the
financial risk of farming with the growers. Shareholders' one-time
seasonal investment is not refundable should adverse weather
conditions, such as last year's flood in the Midwest, result in reduced
crop yields.
"In a sense, it is gaining consumer support for the farming project
and letting them have responsibility in the foods they eat," says
Melody Newcombe, a CSA farmer in Kingston, N.Y.
Mail-Order Marketing: Mail-order marketing is a third direct
marketing option practiced by family farmers. Like other
businesses, some farm families have started selling products, like
cheese, fruits and cereals, through the mail. Catalogues are now
available from family farmers throughout the country.
Restaurants and Cooperative Grocery Stores: A growing number of
family farmers have successfully marketed their products to local
restaurants and cooperative grocery stores. These retail outlets are
often eager to purchase directly from family farmers who can
guarantee prompt delivery of fresh, locally grown or organic
produce.
Most farmers who market to restaurants and cooperatives offer
products that have been harvested and delivered within 24 hours --
making their products a uniquely fresh alternative in a marketplace
where food usually travels thousands of miles before it is eaten.
Farmers who sell directly to restaurants can earn a premium above
normal crop prices. In addition, farmers who produce organically
can gain a premium above wholesale prices for providing fresh
organic products that accommodate restaurant and shopper food
preferences.
Home-Delivery: Some family farmers have made the time to not
only grow, harvest, package and market their products, but also to
deliver their products to customers' homes on a regular basis. This
form of direct marketing allows farmers to capture an even greater
share of the food dollar by providing customers with the ultimate
convenience of having fresh fruits, vegetables, and milk and other
dairy products delivered to their doorstep.
_________________________________________________________
OBSTACLES PREVENT FARMERS FROM DIRECT MARKETING
Although direct marketing has helped thousands of family farmers
attain a higher percentage of the food dollar, it is not the solution for
all farmers. Knowledge, time and financial constraints prevent the
majority of traditional crop farmers from marketing their own
products and earning a viable living on their land.
Knowledge: Because direct marketing is based on niche markets and
is a relatively new component to family farming, most farmers must
expend a lot of time researching and learning how to process and
market their products. Many farmers begin their direct marketing
and processing endeavor on an ad-hoc basis: trial and error, reading
journals, contacting suppliers with questions and occasionally
reaching out to other, successful producers for advice. "It's a whole
new set of skills that you generally don't learn on the farm," says
Ralph Hilgendorf of Whole Grain Milling Co. who processes and
markets his own grains.
Time: In order to eliminate the middleman, farmers wind up doing
all the work themselves - growing the food, processing or packaging
the raw product to boost its value and make it sellable, and
developing and carrying out a marketing plan. This means that
family farmers, many of whom already work off-farm jobs to
survive, will need to put in additional hours to market their
products.
Money: Farmers who make the decision to process and market a
product must invest in new equipment, product inputs and
advertisements and brochures. Ralph and Doug Hilgendorf, for
example, spent approximately $100,000 four years ago on initial
start-up costs to begin milling and marketing their own crops.
Federal and state governments must bear greater responsibility for
the future of America's food system by supporting family farmers'
marketing efforts and making it possible for more traditional
producers to earn a viable living.
In the short-run this will require the federal government to adjust
price supports upward to cover farmers' costs of production. Only
then will the majority of farmers have enough time and resources to
devote to direct marketing. In the long-run the USDA and extension
agencies must provide farmers with access to financial and
educational opportunities that will allow them to add value to their
products by direct marketing and processing.
_________________________________________________________
Next Edition of Farm Aid News: Examples of farmers who are
successfully marketing to local consumers.
_________________________________________________________
Sources: "Community Supported Agriculutre," SAFE FOOD NEWS,
Witner, 1993; "The Facts About Food Spending," FOOD INSTITUTE
REPORT, October 11, 1993; Telephone interviews with: Ted Spitzer,
PUBLIC MARKET COLLABORATIVE, July 15, 1994; Mark Winne,
NATIONAL ASSOCIATION OF FARMERS' MARKETS PROGRAM, July 15,
1994; Ralph Hilgendorf, WHOLE GRAIN MILLING CO., July 12, 1994.
_________________________________________________________
We welcome comments and suggestions: contact Harry Smith at
FARM AID, (617) 354-2922. We encourage the reproduction of
FARM AID NEWS. Produced by The Institute for Agriculture and
Trade Policy (IATP) for FARM AID. Editors: Gigi DiGiacomo and
Harry Smith. For information on other agriculture bulletins, contact
IATP: (612) 379-5980.
_________________________________________________________