Interest in local food is booming, for a variety of
reasons--from local economic benefits to the freshness and quality of
local food. For fruit and vegetables growers, local markets can reduce
transportation costs and may also lead to positive market relationships
that can help maintain fair prices and thus farm profitability.
Direct markets are booming.
Selling produce directly to the consumer allows buyers and sellers to
communicate directly, leading to customer loyalty. It builds awareness
about the importance of local food production. It helps keep farms,
especially smaller ones, in business. And the good news is that direct
sales at roadside stands, farmers’ markets, and community supported
agriculture (CSA) have all increased in recent years. The U.S. Census
of Agriculture reported sales of agricultural products directly to
consumers went up by 120% from 1997 to 2007, compared to an increase of
51% in total agricultural sales. In the Northeast, direct market sales
went from $101 million in 1997 to $213 million in 2007. Nationwide,
vegetables account for 28% of all direct market sales, even though only
13% of farms grow vegetables.
Beyond direct markets.
While direct sales offer many benefits, they are not a silver bullet.
For one thing, direct market sales account for just 3% of all
agricultural sales, even with the recent increase. And while there’s
potential for more growth, direct markets have their limit. I don’t
think we are there yet in most locations, but at some point, demand
gets saturated and new vendors simply take markets from other growers.
In addition, the vast majority of produce that consumers buy still
comes through wholesale channels – to supermarkets, restaurants,
schools, senior centers, etc.
In order to keep building
the market for locally-grown produce, growers will need to sell more to
local businesses and institutions, as well as directly to consumers.
Selling fruits and vegetables to local foodservice and institutional
markets can be especially beneficial for larger growers that have been
‘price takers’ in commodity markets that compete with produce from all
over the western hemisphere.
There are (at least) four different strategies for improving
connections to local institutional buyers; they require different
levels of investment of both time and money (management,
transportation, recordkeeping, etc.). You’ll have to decide which make
sense for your farm and your finances.
could work with a local or regional produce distributor that already
has the necessary infrastructure and relationships with local
institutional buyers. This is the lowest cost approach but also leaves
you one-step removed from a direct connection to the buyer.
If there are one or two larger institutions in your area, it may be
worth approaching them individually to see if you can get a toe in the
door by marketing a relatively large volume of a few items.
If there are multiple institutions in your area as well as multiple
wholesale growers, it may be feasible to develop a marketing network
that aggregates sufficient supply and demand to meet the needs of both
parties while covering the cost of ordering, delivery, invoicing,
4. If you are a rural farmer near a small rural
institution it might be worth developing a diversified supply for that
customer, like a wholesale CSA.
As you compare these
options see if you can work with local food system organizations in
your area to assess the market potential within your delivery range.
That could be Extension, a local college food studies program, a
non-profit food group, or a community economic development agency. Once
you decide which way to go, there are some key actions that can help
you succeed. These include: telling your farm’s story; identifying a
set of products that are most suitable for you to supply; understanding
the policies and procedures of the buyer; negotiating pricing;
assisting with product promotion; explaining the steps you’ve taken to
minimize food safety risks; and setting up ongoing communication.
Telling your story.
A lot of people want to know something about where their food comes
from, who grew it, and how. Providing this information helps create
trust in you and your products. Create a document that shares the facts
about your farm, this could be a simple fact sheet or a glossy
brochure. Highlight the following: your farm’s mission (why you do what
you do); the history of your farm and length of time your family has
been in the community; production practices used on the farm (IPM,
organic, ecological, low-spray or whatever you can honestly say about
your commitment to stewardship). If possible, include pictures of your
family, your facilities, and your products. Describe any special
connections your farm has to the community (service on local boards and
committees, awards received, festivals you hold).
Identify products you can supply.
Have a list of all the crops you grow, and when they’re available over
the growing season – and beyond. It may surprise you that institutional
buyers are often not aware that many crops are held in storage, or
produced using season extension, so that they can be purchased locally
even when they are ‘out of season.’ A calendar of availability
helps overcome this misunderstanding. Working with other local farms to
aggregate product can increase the number of crops offered, their
volume and time of availability.
Policies and procedures.
Be prepared to ask questions to get the specific information you need
to make a decision. What are the requirements to be a vendor to the
institution in terms of the application process, insurance coverage,
etc? How will orders be given to you – by phone, FAX, or online?
If you can’t fill an order how soon must you tell the buyer, and what
type of product substitution is allowed? Are there particular product
qualities such as size or color of certain crops that are preferred?
What types of packing containers are required for different products?
the delivery and payment arrangements. When and where should
orders be delivered? How often are deliveries needed? Where
should invoices be sent and how long will it take for payments to be
Some buyers will not be receptive to this conversation, but others,
especially those looking to increase their purchasing of local foods,
may be amenable to agreeing on prices, or at least ranges of prices,
ahead of time. It can help this discussion if you know your cost of
production for different crops, so that the prices you offer are based
on a reasonable expectation of profit, and you can explain that. If you
can offer a quality advantage over anonymous wholesale crops, that may
help you get a better price, too. Do you emphasize varieties with great
flavor? Are you harvesting daily and handling carefully to assure peak
freshness? If so, be sure to explain that.
Assist with product promotion.
If an institution is interested in local food, it’s often because they
want to address the interest of their customers. Help them tell their
customers that they are doing so. If appropriate, provide
point-of-purchase materials with your farm name and location; these may
be cards, posters, special product labels or containers, or other
display enhancements. If you have recipes to help consumers use your
product, offer them to the buyer. Identify and work with people within
the institution that have the interest and ability to promote local
food, such as wellness, nutrition, or farm to school coordinators and
Explain your food safety plan.
Food safety is on a lot of buyers’ minds these days, especially with
the requirement by some supermarket chains that their growers comply
with GAPs (Good Agricultural Practices) which means they develop and
implement a food safety plan and pass an annual audit. If you are GAPs
certified, let your buyers know. If not, you should still have a food
safety plan that addresses the key issues covered by GAPs (For a
summary of these issues see http://www.uvm.edu/vtvegandberry/GAPS%20short%20checklist.pdf
). This is something that all farms, whatever their markets, will
probably need to have in the near future, as consumer awareness of the
food safety issue grows, along with regulations and market requirements.
a nutshell, your food safety plan should describe what your farm does
to minimize risk by: training employees on sanitation, testing wash
water and irrigation water, proper management of manure, wildlife
control efforts, careful produce handling, proper storage conditions,
equipment cleanliness, and good recordkeeping.
Keep communications flowing.
Ask for feedback and listen carefully to comments from your
institutional buyers. Have your products been of satisfactory and
consistent quality? Are there particular crops or varieties that
they were especially pleased with? Displeased? Set up a time to
meet during the off-season to review sales information and plan for the
coming year, hopefully at a higher volume of sales.
Much of the information presented here comes from Selling to Institutions: An Iowa Farmer’s Guide http://www.law.drake.edu/clinicsCenters/agLaw/docs/agPublications-selling.pdf