SALEM, Ohio – Three C’s can help small farms stay in business: competition, cash and consumers.
It probably wouldn’t hurt to add a few more C’s to the mix, either: sweet corn, cucumbers, carrots, cantaloupes and maybe even chevon or chicken.
Enter direct marketing, and all of the above come together to form one of the fastest growing segments of agricultural sales.
“Small-scale farms can connect the producer and consumer more directly,” through direct marketing opportunities, said John Ellerman, an Ohio State University ag marketing specialist.
The growing popularity of direct marketing – think roadside stands, pick-your-own strawberries and corn mazes – is also directly traced to consumers’ growing desire to know where their groceries come from.
Changing drive. The direct marketing movement started in the 1970s as a producer-oriented actions to add value to products, according to Ellerman. The movement is now consumer-driven.
“Every community wants a farmers’ market. Everyone is interested in fresh produce,” he said.
But the movement has one major problem – one that is welcome to the ears of producers: There aren’t enough goods or producers taking part in direct marketing or farm markets to meet demand.
“The reality is that they’re all selling out by 10 a.m. or so. Where does that get you when the market runs into the afternoon and you have nothing to sell?” Ellerman said.
“Producers still have to work at it, but just about anywhere you’ll find a market for virtually anything.”
Not a new idea. Though the idea of direct marketing is not a new one, it is gathering more followers.
In 1910, 40 percent of the consumer food dollar went to the farmer. In 2000, just 8 percent found its way back to their pockets; nearly 90 percent – a whopping $10 billion – went to suppliers and processors, according to Ellerman.
“It doesn’t take a lot to see that’s not sustainable. Farmers are squeezed more each year, and the [retail] cost of products doesn’t represent inflation,” he said.
Because each step of food marketing adds a mark-up, direct marketing is one of the best ways to assure producers get the most profit, he said.
Adding value. The method eliminates the middle men, sometimes bringing producers face to face with their consumers.
By selling directly at retail, prices are stabilized for the producer and are “usually about the same as what consumers pay at the grocery store,” Ellerman said.
Often times, buyers are willing to pay a premium for the experience of meeting the producer and forming a relationship with them.
Direct marketing is also the easiest way to add value to farm products and, in some cases, can be done with little to no capital investment.
“Price is fourth or fifth on the list [of consumer needs]. We’ve found they emphasize that the product is fresher and grown locally,” Ellerman said.
“Customers are definitely looking for that, no doubt about it.”
New products. In addition to the standard sweet corn, tomatoes and other fruits offered through roadside stands, Ellerman said there are several new avenues emerging.
One is marketing produce and meats directly to restaurants. Though it often requires some specialization for focused products, it’s a viable alternative.
“Chefs will come out to the farm to see what you’ve got and how you grow it. They’re pretty specific on what they want,” Ellerman said.
“But most of all, they like to know where the food comes from.”
Upscale restaurants will pay top dollar for the inputs and often advertise locally grown and purchased produce on the menu.
Ethnic groups. Another niche gaining momentum is marketing to specific ethnic groups. Specifically, Ellerman sees growing opportunities in the meat goat (chevon) market.
“Ethnic groups spend $150 billion a year in the United States to buy ethnic foods. By 2010, they’ll spend $300 billion. That’s not petty cash.”
Especially around Cleveland and Columbus, there has been a growing interest in goat meat.
“One community in Columbus is buying 400 goats a week and growing. There’s potential there,” he said.
They will also strive to buy they foods they want, not just what they can get, as the economy strengthens in their communities, he said.
There’s also plenty of room in the marketplace for producers of grass-fed and organic meats, and other value-added products such as marinated and ready-to-cook chicken breasts, a product offered at the Athens farmers market.
In the end. Quality is No. 1 and in all surveys has been the top reason consumers shop through direct marketing channels, according to Ellerman.
The experience is part of the transaction and selection and convenience are more important than price, he said.
“Direct marketing can be win-win for everyone.”
For more information on direct marketing opportunities for your farm, contact John Ellerman at 740-289-2071.
Tips and hints.
During a presentation at the Farm Science Review, Ohio State University ag marketing specialist John Ellerman outlined some tips for the following direct marketing schemes.
Pick-your-own operations. Plan for plenty of parking and supervision. Also, a big problem could be liability, so check into coverage.
Success is in the details, so make your operation different from the neighbor’s.
“Make it conducive to families. Once you get a petting zoo going, kids will drag their parents to the berries,” Ellerman said.
Farm stands. With urban development, nearly gone are the days where farmers would leave their products out, customers would help themselves and payment was on the honor system, Ellerman said.
However, the increased traffic helps, so stands should be set up near busy roads. Be sure to feature high-demand items, he said.
Entertainment farming. “Folks are having a hard time keeping up” with the demand for fun-related farm activities, Ellerman said. With corn mazes, school tours, bonfires and hayrides, only the sky is the limit.
“There are so many things you can do and make it work,” he said, recommending that kids be allowed to take something home from the farm – a pumpkin or a craft – that will help them and their parents remember your business.
Marketing to institutions. “The potential [to market to institutions] is enormous, in the billions of dollars,” each year, Ellerman said.
Check with local universities, colleges, schools, prisons and military bases; the government also has incentive programs for marketing to institutions, he said.
Though institutions often require much larger quantities, it offers the producer a chance to specialize in a specific area, such as salad greens.
Using the Internet. With increasing numbers of Americans with Internet access, having a presence on the Web for your farm can be a real benefit. Be sure to update sites often, check for problems, and use a reliable shipping firm.
“Start small and let your business grow,” Ellerman said.
(You can contact Andrea Myers at 1-800-837-3419, ext. 22, or by e-mail at amyers@farmanddairy.com.)
