Download Choosing Your Market- A Direct Marketing Decision Tool

Choosing Your Market
A D i r e c t M a r k e t i n g D e c i s i o n To o l
T
his workbook has been produced by Georgia
Organics to help farmers identify the direct
marketing strategies that will best fit their farm.
Direct marketing agricultural products can increase
the income of small and medium-sized farms, but
deciding on the best markets for a particular farm
can be complicated. With this document we seek to
simplify the decision-making process by providing
information on four types of direct markets, as
well as the barriers to entering those markets, and a
way for a farmer to evaluate his/her ability to jump
barriers.
This workbook will be useful for beginning farmers,
for those who have been farming for a few years and
for those who are not familiar with some of the new
concepts in direct marketing. It is not a comprehensive
guide to all avenues of direct marketing, as it focuses
only on four of the major direct marketing strategies:
farmers’ markets, on-farm markets, community
supported agriculture, and Internet marketing.
It provides up-to-date, key information on these
markets in the South and additional references for
growers to successfully meet the challenges and
opportunities in direct marketing.
Choosing Your Market:
A Direct Marketing Decision Tool for small farmers
TABLE OF CONTENTS
1. Direct Marketing – General Information................. 1
2. Basic Information.................................................... 2
• Farmers’ Market
• On-Farm Market
• Community Supported Agriculture
• Internet Market
3. Farm Evaluation Directions..................................... 6
4. Farm Evaluations..................................................... 7
• Farmers’ Market
• On-Farm Market
• Community Supported Agriculture (CSA)
• Internet Market
5. What Does it Mean?................................................ 11
6. Table of Market Barriers......................................... 12
7. Case Studies............................................................ 13
• Crystal Organic Farm
• Riverview Farm
• Whippoorwill Hollow Organic Farm
• The Chef’s Garden
• Locally Grown Coop
Written and compiled by:
Lynn Pugh
Cover design & layout by:
S. R. Walker Designs
Cover photos: Blueberries,
peppers, gourds, and tomatoes
by Pam Winter; Laura Chenault
of TaylOrganic Farm, preparing
for market, by Marcia Taylor;
Full Moon Farm, at market;
Goldenseal, by Randy Beavers.
Produced by Georgia
Organics, a non-profit
organization founded in
1997 to promote organic and
sustainable growing in Georgia
for the health of the land
and people. Production was
supported by a partnership
with the Risk Management
Agency of the US Department
of Agriculture.
www.rma.usda.gov
8. Market Values.......................................................... 18
9. Perishability Table................................................... 18
10. Value-Added Products............................................. 19
11. Value-Added Case Study.......................................... 20
12. List of Resources for Further Study ....................... 21
Georgia Organics, Inc.
PO Box 8924
Atlanta, GA 31106
770-993-5534
www.georgiaorganics.org
Copyright © 2004
All Rights Reserved
The Georgia Organics Direct Marketing Decision Tool
Direct Marketing
General Information
F
armers capture a much higher share of the consumer food dollar when they market their produce
directly to consumers. Direct marketing offers several benefits for farmers. Cash payment, premium
pricing, and elimination of the middleman wholesaler draws farmers to these avenues of marketing.
Direct marketing makes sense for farmers who are producing low volumes of a variety of crops.
Farmers who produce large volumes of a particular crop will usually find wholesale marketing more
profitable. USDA and other producer surveys indicate that organic farmers market directly much more
frequently than do conventional farmers. Farms of less than 20 acres account for the majority of the
direct marketing in Georgia. In 2002 only 3.3% of the sale of agriculture products was sold directly
to individuals for human consumption in Georgia. Therefore, there is much opportunity for growth of
direct marketing of fruits and vegetables in Georgia.
The types of direct markets considered in this tool are farmers’ markets, on-farm markets, communitysupported agriculture (CSA) and Internet markets. There is background information on each of these
types of markets on page 2 to page 5 of the workbook. On pages 13 to 18, there are stories about various
Southern farmers using these strategies of marketing.
The Direct Marketing Decision Tool will help you evaluate your farm on five of the factors that are
barriers to entering a market. These factors are: location of the farm, special expertise, transportation,
physical resources, and regulatory constraints. Information will be presented to help you determine your
ability to jump the barriers these markets present. You will compare your ability to jump with the height of
the barriers for a particular market in order to identify the best markets for your farm products. Once you
have these markets identified, you must also consider perishability, value of the market, your personality
and other unique personal factors to come to a final decision on your best marketing strategies. Many if
not most farmers use a combination of marketing strategies to enhance their profitability.
One of the basic factors to consider is perishability, or how long a product is edible. Internet marketing
presents a special challenge, as the product will generally be shipped. The cost of shipping a perishable
crop may make that marketing strategy cost-prohibitive, whereas, with a product that is nonperishable
or with a low perishability, it may be feasible. A list of some common farm products and a ranking of
their perishability is found on page 19 of the workbook.
Another factor to consider is the value of a market. All markets have limiting factors that determine the
maximum profit one can make. These factors tend to be unique for a particular farmers’ market, CSA, onfarm market or Internet sales program. Many times the limits are set by the size of the customer base, location,
or time. Some average values for the different Georgia markets are given on page 19 of this workbook.
One of the reasons people like to buy direct is that they can interact with the farmer, the person who
grows the food they are buying. If the farmer enjoys this interaction and is helpful and friendly, it will
increase the chance of success in the market. If this type of interaction is not enjoyed by the farmer,
farmers’ markets, on-farm markets and CSAs will probably not be satisfactory, unless there is a partner
to perform these functions. Consider your personality when weighing types of markets to enter.
One way a farmer can enhance the viability of their operation is by producing an array of value-added
products – foods processed from their farm products – to sell directly to the consumer in addition to fresh
fruits and vegetables. Some examples of value-added products are salsa, syrup, cider, pickles, preserves,
jelly, dried and canned fruits and vegetables, butter, yogurt, cheese, milled flour, meat products, and wine.
These products command a much higher price than the fresh products and can help diversify a farm’s
product line. More information on value-added products can be found on page 20 of the workbook.
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The Georgia Organics Direct Marketing Decision Tool
Basic Information
Farmers’ Markets
Brief Description
A farmers’ market is a market in which producers from a local area gather to sell their own produce directly
to the public. By selling direct the farmer is able to sell produce at retail. A farmers’ market is a low-cost
way for a beginning farmer to learn about retailing and to develop marketing skills. The cost to participate
is usually low, and at a good market there are plenty of customers. Farmers’ markets have been increasing
in popularity in the last two decades and many areas have one or more markets.
Benefits
• Established customer base
• Low marketing start-up cost
• Small lots of produce acceptable
• Immediate feedback allows testing of product line
• Retail prices
• Social contact, networking
• Ability to promote farm and products
Challenges
• Limited sales volume, since each contact is one to one
• Time to prepare and be present at the market
• People skills are a necessity
• Retailing skills are also necessary
• Establishing a loyal customer base takes a few years for a new market
Required Resources
• Vehicle to carry produce
• Display tables
Statistics
• The number of farmers’ markets in the US has grown 79% from 1994-2002
• There are 3,100 farmers’ markets presently operating in the US
• There are 12 independent farmer’s markets in Georgia
• The increase is due to consumer interest in fresh, local products
• 58% of the markets participate in government nutrition programs, such as WIC
(The Special Supplemental Nutrition Program for Women, Infants, and Children)
• 19,000 U.S. farmers sell their produce only at farmers’ markets
Tips
• Farmers should bring only high-quality produce to the market
• Display produce in an attractive and eye-catching manner
• It’s all about relationships – talk to the customers; be friendly and courteous
• Ask a fair price, be reasonable and don’t undercut fellow farmers
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The Georgia Organics Direct Marketing Decision Tool
On-Farm Markets
Brief Description
On-farm sales involves bringing people onto the farm to buy products. This strategy includes pick your own,
agri-tourism and farm markets. The information presented here is directed toward farm markets located on
the farm. This is probably the oldest method of selling farm produce. Farmers have been selling produce
to their neighbors since the beginning of agriculture. Farm stands run the gamut, from the back of a truck to
an elaborate store. Many start out simple and become more substantial as the stand succeeds.
Benefits
• Farmer can work between customers
• No direct competition with other farmers
• Time is saved as there is no travel or packing to travel
• Market can be set up at farmer’s convenience
• Customers generally come to buy
• Customers build relationship with farm and farmer
• Opens opportunities for other activities such as tours or workshops
Challenges
• Attracting customers
• Liability insurance is a necessity
• Must have a building or stand to display produce
• Farm must be kept neat and mowed
• Farm must be close to population center
• Potential customers may show up when stand is not open
• Strangers coming onto farm property
Required Resources
• Building or shelter for market
• Area for parking
• Accessibility from the road
• Liability insurance
Tips
• Customers like a clean facility with clean workers and washed produce
• Always post the price and include information about the product such as variety
• Produce sorted for size and quality is more popular
• Customers frequently request drinking fountain, rest rooms, picnic or recreation
areas, and play areas for children
• Clearly mark access to the farm stand and have enough parking
• Most customers shop in the morning
• Friday and Saturday are the most popular shopping days
• Best located within 5-10 miles of a population center
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The Georgia Organics Direct Marketing Decision Tool
Community Supported Agriculture
Brief Description
Community Supported Agriculture (CSA) is both a marketing strategy and a philosophy. The farmer sells
shares in the next season’s produce before the season begins. Each week of the season the shareholder will
receive a “share” or box of fresh produce from the farm. In some CSAs the shareholders are involved in
decision-making of all aspects of the operation, in others the farmer makes all the decisions. Each CSA is
unique to the farmer and the community that is served. Shareholders may pick up their boxes at the farm, at
delivery sites, or home delivery may be offered. Recently, farmers have been developing e-mail communities that order their produce online and pick it up at a designated spot.
Benefits
• Farmer receives money before the season starts for seed, inputs, supplies, etc.
• Farmer markets in the off-season to recruit new members and is able to concentrate on
production during the season
• Relationship with shareholders is at least one season long, and may extend for years afterwards
• Community is able to share risk of farming with support and possibly labor
Challenges
• Crop production – as many as 40-50 different crops must be grown to provide diversity to shareholders throughout the season
• Labor availability – crops are continually being planted, harvested, cleaned, sorted, and packed
• Location – if the location of the farm is near enough to the customers, on-farm pickup is the least
burdensome for the farmer; otherwise, delivery sites must be established
• Shareholder retention – too much produce or too much unfamiliar produce will cause shareholders
to drop out of a CSA
Required Resources
• Experience growing large quantities of many different vegetables
• Small amount of land OK if intensive production used
• Location close to urban center
• Ability to manage the crops, harvest, pack, and deliver
• Labor
Statistics of CSAs across the US
• 20-30 shares per acre is possible
• 30-40 shares per farmer or laborer is possible
• To earn a full-time income 80-100 shares are necessary
• The weight of the share per week ranges from 5-20 lbs. (average 10 lbs.)
• The number of items per share per week ranges from 5-12 (average 8)
• The share price ranges from $300-$700 per share/yr ($10-$20 per share/week)
• Season length ranges from 10 to 52 weeks
Tips
• Start small – 5-25 shareholders if experienced at growing, otherwise grow a couple of years for
farmers’ markets and keep good records of production
• Diversify marketing, especially at first, selling excess to farmers’ markets, restaurants, or on-farm
• Involve shareholders with farm events, field days, work-shares, etc. to increase shareholder retention
• Publish a newsletter each week to put in the shareholders’ box. Include what is happening on the
farm, a list of what is in the box, recipes, etc.
• Educate shareholders to seasonal eating, sustainable principles, and unfamiliar produce
• Don’t underprice the shares – this is the biggest reason for farmer burnout
• Make the strategy work for you – there are many modifications using e-mail or computers
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The Georgia Organics Direct Marketing Decision Tool
Internet Markets
Brief Description
Internet marketing systems can vary from a simple e-mail ordering system to an online store with shopping
cart. All involve making a web presence with a list of products for sale and a way for customers to order the
products. A system is put in place whereby the customer can pay for the products by credit card, third party
vendor or check. Products may be delivered or picked up if the customers are local or shipped if customers
are farther away.
Benefits
• Increased visibility of the farm
• More information on the products can be offered
• Ability to broadcast the message to thousands of people
• Location of the farm is of little consequence as long as there is Internet access
and shipping is convenient
• Streamlined business transactions
Challenges
• Intimidation of new and evolving technology
• Good understanding of computers and on-line world is necessary
• Technology and infrastructure cost
• Increased personnel and administrative costs
• Establishing customer trust
• Product that can be shipped for a price people will pay
Required resources
• Computer hardware
• Computer software
• Fees to connect to server, to register domain name, and to host site
• Knowledgeable personnel
• Time to learn new technology
• Shipping arrangement with UPS, or other delivery service
• Payment services for site
Statistics
• Food items as a category of internet sales are expected to increase by 30% in the next 5 years
• Online sales of all categories are expected to reach $64 billion in 2004 and grow to
$117 billion by 2008
• Buyers in 2004 will spend $585 per year online; buyers in 2008 are expected to spend $780 per year
• Many of these buyers will be first time buyers, just becoming familiar enough with
the online environment to feel comfortable purchasing
• Many farmers marketing on the Internet cite 24-hour visibility and ability to make contacts
all over the world as the greatest advantages of Internet marketing
Tips
• Many students in high school or college will do website design for a reasonable cost
• The website should load quickly
• Good product information is important to the customers
• Customer service should be responsive and assure the customer of the security of
their personal information
• Customers are especially interested in food items not available locally
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The Georgia Organics Direct Marketing Decision Tool
Farm Evaluation Directions
T
he following information is presented to help you determine your ability to meet the barriers that are
a part of each of the marketing strategies. Each type of market has a unique level of these barriers.
You will look at the five main factors that create barriers to entering any of these direct markets.
Factors to Consider:
1. Location of the farm in relation to population centers. This will
determine the customer base from which you may draw.
2. Special expertise, such as marketing or computer skills.
3. Transportation. For some of these markets, you must transport
the product, and a reliable, appropriately-sized vehicle is essential.
4. Physical resources are needed for each type of market. These will vary
from a tent and table to more elaborate computer set-ups.
5. Regulatory constraints. Regulatory constraints refer to the licenses,
fees, insurance, taxes, zoning regulations and certifications that are
necessary for some markets.
For each of the barriers, you will judge your ability to jump that barrier based on the information
provided and then assign yourself a number from 1 to 5. A “1” means you could jump a low barrier
and a “5” means that you can easily jump a high barrier. You will need to complete the evaluation for
each market in which you are interested. Once you have determined your unique set of numbers for
each market, you will compare your set of numbers (your ability to jump the barriers) to the height of
the barriers (also a number from 1 to 5, with “1” being a very low barrier and “5” being a very high
barrier) to determine the markets that will be best suited to your situation.
To get started
• Use one of the Farm Evaluation sheets found at the end of the book.
• Fill in the numbers you decide for yourself, using the guide for the market you are considering.
• Turn to “What Does it Mean?” on page 11 and follow the steps to analyze your results and
identify the best marketing strategies for your farm.
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The Georgia Organics Direct Marketing Decision Tool
Farmers’ Market Evaluation
Location of farm – The closer the farm is to the market, the less time and money is required to
get there. Since the travel must be by the farmer, it is at his/her discretion whether it is worth the
travel. Farmers’ markets can be found in most population centers of 10,000 or more, but there are
also markets in many smaller cities. Most farmers find traveling more than 100 miles is unprofitable, unless a market commands especially high prices.
• If your farm is 0-10 miles from a market, score 5.
• If your farm is 11-35 miles from a market, score 4.
• If your farm is 36-60 miles from a market, score 3.
• If your farm is 61-99 miles from a market, score 2.
• If your farm is 100 or more miles from a market, score 1.
Special expertise – Farmers are competing with each other at the market because they have many
of the same products. The attractiveness and cleanliness of the display, the appearance of abundance, and the friendliness and helpfulness of the farmer are very important. Rate yourself on
your ability to manage a retail operation from displays to customer service.
• If you have had a good bit of experience in retail and feel that you are good at it, score 5.
• If you have had no experience, score 1.
• Judge where you fall between these two extremes to score 2, 3, or 4.
Transportation – Reliable transportation that will carry everything necessary for the market is
essential. If you cannot get there you cannot sell anything.
• If you have a refrigerated truck, score 5.
• If you have a truck or van, score 4.
• If you have a large car, score 3.
• If you have a small car, score 2.
• If you have no vehicle, score 1.
Resources – Only a few resources are required to sell at a farmers’ market. You need a display
table, a place for cash, scales, and for some markets, a tent. (It may be required for scales to be
certified.)
• If you have all of these resources, score 3.
• If you have none of the resources, score 1.
• If you have some of the resources, but not all, score 2.
Regulatory constraints – The market manager will handle the legal concerns for a market and
often will purchase liability insurance for the market. Farmer vendors should carry their own liability and vehicle insurance.
• If you have insurance, score 2.
• If you do not have insurance, score 1.
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The Georgia Organics Direct Marketing Decision Tool
On- Farm Market
Location of farm – People will generally not travel more than 5 to 10 miles to go to an on-farm
market. The location of the on-farm market relative to population centers will determine its
success to a great degree.
• If there is a population center of 10,000 or more people within 10 miles of your farm, score 5.
• For a population center between 5,000 and 10,000 people within 10 miles of your farm, score 4.
• If there is a population center of less than 5,000 people within 10 miles of your farm, score 3.
• For a large population center more than 10 miles but less than 20 miles from your farm, score 2.
• If there is a small population center more than 10 miles but less than 20 miles from your farm, score 1.
Special expertise – There is no on-site competition with other farms, so retailing skills are not as critical.
Of course, friendly personnel and clean facilities promote return customers.
• Score 1.
Transportation – Since the market is on the farm, a vehicle is not necessary. It is important that
the market be accessible to the customers. Some customers will not come down a dirt road. Pot
holes and complicated directions are big turnoffs to customers.
• If your farm is easily accessible, score 2.
• If your farm is not easily accessible, score 1.
Resources – Customers must have a safe place to park and usually there should be some sort
of structure where the produce is sold. A tent or previously existing building can be used.
Display tables, scales, and a place for money will be needed. (It may be required for scales to be
certified.)
• If you have a place to park and a structure in which to sell your produce, score 2.
• If you are unable to provide these resources, score 1.
Regulatory Constraints – Liability insurance is a must if people are coming on to the farm
property. There may be other local legal constraints such as zoning laws.
• If you have liability insurance and no other legal constraints, score 2.
• If you cannot comply with all legal regulations, score 1.
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The Georgia Organics Direct Marketing Decision Tool
Community Supported Agriculture (CSA)
Location of farm – Location of the farm close to a population center allows shareholders to pick up
their share on the farm, saving the farmer a half day or more each week. When customers are further
from the farm, delivery sites can be arranged enabling the farmer to travel to the customers. Farmers
generally consider it unprofitable if the drive is more than 100 miles to a delivery site.
• If your farm is 0-20 miles from most of your customers score a 5,
• 21-40 miles score 4,
• 41-60 miles score 3,
• 61-80 miles score 2,
• 81+ miles score 1.
Special expertise – Successful CSAs involve a good bit of communication, both written and
verbal, so good communication skills are important. Newsletters and recipes are usually offered
to shareholders. Budget management is important as the money comes in all at once, before the
season. Production management of a variety of vegetables is more important in a CSA, as a
commitment has been made to the shareholders to deliver a weekly share of varied produce.
• If you feel that you are highly qualified in the areas of communications, budget and
production management, score 5.
• If you feel qualified, score 4.
• If you feel qualified in two of the three areas, score 3.
• If you are qualified in one of the three areas, score 2.
• If you do not feel you have the skills needed in these areas, score 1.
Transportation – If delivery is not on the farm, reliable transportation is a must. Customers expect
to pick up their share in a certain time frame each week. Some CSAs are beginning to experiment
with shipping by UPS or other carriers as a delivery option.
• If delivery will be at the farm, score 3.
• If delivery sites must be established and you have a truck or van, score 3.
• If you have a large car, score 2.
• If you have a small car, score 1.
Resources – Space to pack boxes or bags is necessary at the farm. Coolers are often used to
maintain the quality of the produce until it is picked up. If the farm is at a distance from the
customers, delivery sites must be found and arrangements made to preserve the quality of the
produce. Labor for the constant planting and harvesting necessary to have varied produce all
season is also an important resource.
• If you have all of these resources, score a 3.
• If you have some of these resources, score a 2.
• If you have none of the resources needed, score a 1.
Regulatory Constraints – There is an agreement between the farmer and shareholder that a weekly
bag of produce will be provided for a set amount of money. This is a constraint of integrity that
must be honored. If people are coming on the land, liability insurance is a must.
• If you are able and willing to honor this type of agreement and have liability insurance and
if shareholders will be on the land, score 3.
• If shareholders will be on the land, but you have no liability insurance, score 2.
• If you are unsure of your ability to honor this type of agreement, score 1.
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The Georgia Organics Direct Marketing Decision Tool
Internet Market
Location – Location is not important as long as services such as electricity, telephone, water and
shipping are available.
• Score 1.
Special expertise – A farmer must be comfortable with the computer to sell over the Internet, or
have a partner that will fill that role. Even when someone else does the design and programming,
the farmer must use the system. The more expert the farmer, the less outside computer help must
be hired.
• If you are proficient in web design, Internet research, word processing, and e-mail score 5.
• If you are proficient in three of the four areas, score 4.
• If you are proficient in two of the four, score 3.
• If you are proficient in one of the four areas, score 2.
• If you are proficient in none of the four areas, score 1.
Transportation – Shipping services at a reasonable cost are a necessity for Internet sales. Reliable
transportation is necessary if delivery is local.
• If sales are local and you have reliable transportation adequate to carry the produce, score 2.
• If sales are at a distance, and one of the shipping companies will pick up at your farm, score 2.
• If you must take the produce to the shipping company, score 1.
Resources – A computer, monitor, printer and an internet service provider are the minimum
resources a farmer needs for Internet sales. DSL or cable service will allow for faster connections.
• If you have all of these resources, score 4.
• If you have three of the four resources, score 3.
• If you have two of the four resources, score a 2.
• If you have none of the resources, score 1.
Regulatory constraints – Knowledge of laws on interstate commerce, taxes, shipping rules and
insurance are necessary for this type of marketing.
• If you have an in-depth knowledge of all four of these areas or consider yourself willing
and capable of doing the research to gain the knowledge, give yourself 4.
• If you have no knowledge of these areas and are not willing or able to do the research, score 1.
• Judge where you fall between these two extremes for a score of 3 or 2.
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The Georgia Organics Direct Marketing Decision Tool
What does it mean?
How should I market?
Farm Analysis
Step 1 – Compare your numbers from your Farm Evaluation with the numbers shown on the
Market Barriers Table for the market you are exploring. If your numbers are as high, or higher
than the barriers, go to step 2.
If some of your numbers are lower, look at the barrier and decide if there are changes or
investments you can make that will give you the ability to jump that barrier. If not, then this
market may not be successful for you. If you can figure a way over the barrier, continue on
to step 2.
Step 2 – If perishability is going to be a problem in this market, consult the perishability
table on page 19. If perishability is not a problem, go on to step 3. If you are going to ship
perishable produce, check the price for cold shipping and determine if it is within a reasonable
range. If it is reasonable, go on to step 3. If not, then this is not a market for you.
Step 3 –Will this market provide the income you need? Consult the table of market values on
page 20 for an idea of the range. If the income looks acceptable, go to step 4. If not, consider
how you could increase income by increasing days at the market, open more days on-farm,
sell more shares, etc. Also, consider entering more than one type of market or producing some
value-added products. Look at page 20 for information on value-added products.
Step 4 – Is your personality suited to this marketing strategy? If so, go to step 5. If you would
not enjoy working with customers, consider a partner to handle customer service.
Step 5 – Consider any personal or family issues that may affect your marketing.
If it all checks out, then you have found a marketing strategy that you should be able to use
successfully. Most farmers utilize a mix of markets to maximize their profits. Investigate
several to find those that are suited to your situation.
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The Georgia Organics Direct Marketing Decision Tool
Market Barriers Table
Height of the Barriers to the Market*
Barrier
Farmers’
Market
On-Farm
Market
Community
Supported
Agriculture
Internet
Location of farm
3
5
4
1
Special Expertise
2
4
2
2
1
2
2
2
4
3
3
3
5
4
4
4
Transportation
Resources
Regulatory
Constraints
Barriers to entering each type of market are scored on a scale of 1 to 5, with 1 indicating the
lowest barrier and 5 indicating the highest.
Explanation of evaluation criteria:
Location of farm – Distance of the farm from a major population center
Special expertise – Specialized knowledge not related to farming that is necessary to successfully
use this strategy of marketing
Transportation – Availability of reliable, appropriate mode of transportation or access to shipping
trucks ( UPS, Fed Ex, etc.)
Resources – Buildings, equipment, tools, etc. necessary for this strategy of marketing.
Regulatory constraints – Rules, laws, insurance that must be followed for this type of marketing
strategy.
* These values were determined by interviews with local farmers, information collected from published sources and
personal experience. They do not have a numerical significance aside from very high, high, medium, low-medium
and low.
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The Georgia Organics Direct Marketing Decision Tool
Case Studies
Crystal Organic Farm
N
icolas Donck was one of the pioneer farmers
who helped to set up the Morningside Farmers’
Market in Atlanta ten years ago. The market started
out small, a good match for the small, organic
farm he was developing. As the years passed, the
customers at Morningside learned to appreciate the
fresh, delicious food and demand has grown. As
more customers have come to the market, Nicolas’
offerings have increased, along with those of the
other farmers. Morningside Farmers’ Market has
given its farmers a connection to this increasing
customer base for local, organic produce, so they
have been able to increase production.
“This is the perfect moment to start a new farmers’
market,” Nicolas says. There is a growing demand,
as evidenced by the crowds at Morningside and
the new farmers’ markets popping up all across the
state. It works out well for new farmers to start a
new farmers’ market so that they can grow together.
By the time the farmers’ market has developed a
faithful customer base and really taken off (about
three years), the farmers will have learned enough
to increase their production
to meet the demand. These
new markets also will help
build a sense of community
in the farm’s local area.
For Nicolas, the real value to
his organic farm is the ability
to live with his family close to
the earth. He says, “It’s what
makes it worthwhile. Having
the kids out there with you
in the fields, watching them
grow! I love it!” Nicolas and
his wife, Madeline Rains, run
Crystal Organic Farm with
the help of their children,
Gillen and Jesse.
Nicolas Donck
Crystal Organic Farm
Newborn, GA 30056
770-784-6571
[email protected]
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The Georgia Organics Direct Marketing Decision Tool
Case Studies
Riverview Farm
W
es and Charlotte Swancy provide fresh, organic produce
for about 130 families in the Atlanta area for 6 to 7 months
a year. They are operating a CSA (Community Supported
Agriculture) for the second year on a portion of their 150-acre
family farm in the foothills of north Georgia. Last year they
started the CSA with 25 shareholders and increased their number
of shareholders five-fold by word of mouth, the national Local
Harvest website listing and advertising at their farmers’ markets.
This method of marketing has great potential for Georgia,
according to Wes. During 2004, several new CSAs started in the
north Georgia area.
Instead of a large prepayment, the CSA at Riverview allows the
members to pay for their share a week in advance of the delivery.
The price will be dependent on what is available that week but
averages around $25. Approximately half to two thirds of the
farm’s income comes from the CSA. Riverview also markets
at the Morningside Farmers’ Market and the Spruill Gallery
Farmers’ Market and they do a limited amount of wholesale
and on-farm marketing. The CSA has become the core of their
marketing and the Swancys plan to focus on this strategy and
expand their number of shareholders next year.
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Wes and Charlotte Swancy
Riverview Farm
888 Graves Rd. NE
Ranger, GA 30734
706-334-2926
[email protected]
The Georgia Organics Direct Marketing Decision Tool
Case Studies
Whippoorwill Hollow
Organic Farm
E
xperience has contributed to the success of Andy and Hilda
Byrd’s Whippoorwill Hollow Organic Farm. Andy’s parents
ran a grocery store and Hilda worked on her family’s farm. Today
the Byrd’s own Whippoorwill Hollow Organic Farm in Walnut
Grove, Georgia. Their farm is located on the busy Highway 138,
near its junction with Highway 78. They have an on-farm store
where they sell produce, organic feed, and Fertrell products Tuesday
through Saturday. They also sell at four farmers’ markets: Square
Market in Covington, Morningside in Atlanta, Decatur Farmers’
Market, and Athens Downtown Farmers’ Market. In addition to
these marketing outlets, they run a small CSA and have a pickyour-own operation. Not one to overlook a marketing opportunity,
the Byrds also are interested in education and tourism, giving tours
and providing animals and a nature trail to the groups that visit.
All of these outlets contribute to the success of the farm, with the
farmers’ markets making the largest contribution.
Andy and Hilda Byrd
Whippoorwill Hollow
Organic Farm
3905 Hwy. 138
Covington, GA 30014
678-625-3272
[email protected]
www.whippoorwillhollowfarm.com
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The Georgia Organics Direct Marketing Decision Tool
Case Studies
The Chef’s Garden
T
he Chef’s Garden Internet marketing plan has proven to be
successful, with orders doubling for their herb and vegetable
plants over the last two years. Cindy and George Martin started
The Chef’s Garden 6 years ago as an Internet business in
Chulafinnee, Alabama, about 10 miles south of Anniston. Being
on the web allows them to compete with large growers while
living in a rural setting.
The plants are grown in greenhouses, specially packed, and then
shipped via UPS for 1 to 3 day delivery. Sales are to customer all
over the USA, both rural and urban.
Cindy is a self-taught webmaster, and she designed and manages
the site herself. An informative website, a good product and
excellent customer service are the necessary ingredients for a
successful farm web store, according to Cindy. The excellent
customer service brings people back to the site, to learn and to
buy. Remarkably, half of the visitors to www.chefsgarden.com
are return visitors.
Customers are loyal to those that treat them right and deliver
a good product. It has taken six years, but Cindy and George
Martin feel that The Chef’s Garden is now a sustainable business
that will support their family.
Cindy & George Martin
The Chef’s Garden
866-855-6344 (toll-free)
[email protected]
www.chefsgarden.com
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The Georgia Organics Direct Marketing Decision Tool
Case Studies
Locally Grown Co-op
T
he computer system Eric Wagoner has adapted and modified from opensource software does the administrative work of this co-op, which was
formed by a group of farmers in the Athens, Georgia area. E-mail messages
are sent to the 75 co-op members, listing the produce that is available each
week. Members can order through the website, reply to the e-mail, or phone
in their order. Items that are ordered are forwarded to the appropriate farmer
along with labels that can be printed and put on the bag. The software
eliminates hours of paperwork, as it keeps track of the finances. Eric and
Chris Wagoner, the current managers of the co-op, pick up the bags each
week and take them to a central location for pickup by members.
There are three reasons that this
unique method of marketing
is working for seven farmers
located around this university
town. All of the
farmers contribute
to promoting the
co-op, they only
have to harvest what
is ordered, and they have a committed
customer base. Every week, each farmer
reports by e-mail what their farm has
available to sell and the cost. The only
other job required of the farmer for this
co-op marketing method is to harvest
the orders and have them ready for
pickup. The co-op takes 10% of each
sale to maintain itself. Total co-op sales
per week vary from $300-$900. Eric
will be making his co-op management
software available for other farmer
groups in the near future.
Eric and Chris Wagoner,
Managers
Locally Grown Co-op
310 Woody Road
Royston, GA 30662
706-245-9774
[email protected]
www.locallygrowncoop.com
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The Georgia Organics Direct Marketing Decision Tool
Market Values
Farmers’ Markets – Many factors will determine how much a farmer can make at a farmers’ market,
such as the type, quantity and quality of the product being sold, the number of customers, the preferences
of the customers, the management of the market, etc. Morningside Market in the Atlanta metro area is
a high-value market, while many of the newer markets in smaller towns would be lower-value markets.
It takes time for a market to become established so that people know about it. In Georgia, the average
amount a small farmer makes seems to range from about $50 to $1000+ for a weekly four-hour market.
Total income will depend on the length of the season in which a farmer participates, the amount and type
of produce, the value of the market, and how many markets are attended. For a May-October season with
a lot of produce at a high-value market, the income could be approximately $20,000.
On-Farm Markets – On-farm markets will vary in their value depending on many of the same issues as
farmers’ markets, such as type, quantity and quality of the product. Visibility and accessibility are also
important factors in how many customers will be attracted. The number of days the market is open and the
number of customers are the critical factors. For a 4 hour market on a week day, once a week, with 10 to 15
customers, the total could be $100. Saturday morning markets bring more people and more sales.
Community Supported Agriculture – The number of shares sold and the cost of the share determine the
money brought in by a CSA. The average income for four Southern CSAs was about $33,000. A recent
national survey found the average income of CSAs to be $20,000.
Internet Market – This market is new for farmers. No Georgia farmers have been found selling fresh
produce over the Internet at this time. Quite a few farmers are using the Internet as a tool in their
marketing, especially as a means of taking orders for produce that is then delivered or picked up at the
farm or a drop-off site. Values could not be reported due to a lack of data, but the potential customer base
is huge if the right products are developed.
Perishability Table
Very Low
Low
Moderate High
Very High
Nuts
Dry Onions
Garlic
Apples
Potatoes
Pumpkins
Sweet Potatoes
Winter Squash
Cabbage
Green Onions
Turnips
Grapes
Celery
Watermelons
Beets
Carrots
New Potatoes
Spinach
Asparagus
Sweet Corn
Peas
Okra
Mushrooms
Blackberries
Raspberries
Tomatoes
Lettuce
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Broccoli
Strawberries
Cauliflower
Green Tomatoes
Cantaloupe
Blueberries
Peppers
Eggplant
Chinese Cabbage
The Georgia Organics Direct Marketing Decision Tool
Value-Added Products
Creating and selling value-added products is an important tool that farmers can use to maximize
their efforts and increase profits. This discussion is presented as an introduction to the principles,
requirements and rewards of this process.
Brief Description
Value-added refers to increasing the value to a customer of some product or service. Features are added to a
product that increases the value to the consumer. It is a customer-driven process in which the farmer retains
more of the food dollar by processing, enhancing, packaging and/or marketing the product him/herself.
Benefits
• Opportunity to capture a larger percentage of the money spent on food
• May increase visibility of the farm
• May expand the market season
• May open new markets
• May benefit the community by adding jobs for processing
and by keeping money within the community
Challenges
• More resources and time required
• Requires different marketing strategies than raw products
• Product must be truly wanted by consumer
• Product must be perceived as worth the extra cost
• More regulations of food safety, taxes and insurance may apply
• Profit not usually seen for three to seven years
Keys to success
• Quality product
• Good marketing
• Sufficient capital
Examples of value-added items
• Jams, jellies, preserves
• Soup mixtures
• Salad mixtures
• Garlic braids
• Wreaths
• Flower bouquets
• Dried flowers
• Dried herbs
• Dried fruit
• Vinegars
• Salsa
• Herbal products
• Pastured poultry
• Free-range eggs
• Grass-fed beef or pork
• Unique or more convenient packaging
• Certain types of labeling
Tips
• Start small
• Identify your customer base
• Base decisions on good records
• Make your product unique in some way
• Create a high-quality product
• Find niche markets
• Continuously evaluate & change production
as evaluations indicate
• Keep informed
• Persevere
• Be sure there is adequate capital
• Think ahead to plan the growth of the operation
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The Georgia Organics Direct Marketing Decision Tool
Value-added
Case Studies
TaylOrganic Farm
A
n early frost pushed Neil Taylor of TaylOrganic Farm
into value-added marketing around 1998. The day before
the frost, Neil picked 15 bushels of green tomatoes, and then
turned them into green tomato relish. Each year since, he has
added new products, building up to his 2004 line of 30 unique
value-added products such as blueberry cider, dilly beans, and
heirloom tomato juice mix.
These products are mostly sold through four farmers’ markets:
Morningside Farmers’ Market, the Green Market at Piedmont
Park and Spruill Gallery Market in Atlanta, and the Chattanooga
Farmers’ Market. He also sells to wholesale and restaurant
customers. At this point, sales cover production costs, but Neil
is streamlining his operation to develop profits. He is moving
away from greens to vegetables and fruits such as tomatoes,
blueberries, blackberries, and figs that can be sold fresh and/or
frozen and processed into value-added products.
Because he has had to use a non-organic certified kitchen
copacker, he has not been able to sell his products as organic.
The copacker processes, packages and labels the product.
There is no certified organic kitchen copacker in Georgia; the
nearest is in North Carolina. Neil advises those interested in
getting into value-added products to find a place to process the
product and most importantly, to determine a market.
Neil Taylor
TaylOrganic Farm
7095 Hwy. 155
Ellenwood, GA 30294
770-981-0827
[email protected]
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The Georgia Organics Direct Marketing Decision Tool
Resources
General – Direct Marketing
Growing for Market, monthly newsletter, $30/yr, Fairplain Publications, Inc., PO Box 3747, Lawrence, KS
66046, 800-307-8949, [email protected], www.growingformarket.com.
Reap New Profits: Marketing Strategies for Farmers and Ranchers, Sustainable Agriculture Network,
www.sare.org/publications/marketing/index.htm.
Small Farm Decision-Making and Enterprise Planning Workbook, North Carolina Extension Service,
www.ag.ncat.edu/extension/publications/decision.pdf.
USDA, www.ams.usda.gov/directmarketing/.
Direct Marketing, Maryland Extension Service www.agnr.umd.edu/users/frederick/pubs/Opfarm13.pdf.
The Legal Guide for Direct Farm Marketing, book by Neil Hamilton, $20 + $3 s/h, Agricultural Law
Center, Drake University, Des Moines, IA 50311 515-271-2947.
Farmers’ Markets
Farmers’ Markets Resources, USDA, www.ams.usda.gov/farmersmarkets/.
The New Farmers’ Market: Farm-Fresh Ideas for Producers, Managers and Communities, book by Vance
Corum, Marcie Rosenzweig and Eric Gibson $24.95 New World Publishing 888-281-5170 or www.nwpub.net.
Sell What You Sow! The Grower’s Guide to Successful Produce Marketing, book by Eric Gibson,
$24.95, New World Publishing 888-281-5170 or www.nwpub.net.
Farmers’ Markets, special newsletter issue, available to download free www.growingformarket.com.
Farmers’ Markets Marketing and Business Guide, www.attra.org/attra-pub/farmmrkt.html.
On-Farm Markets
Arkansas Small Business Development Bulletin on Roadside Farm Markets, www.asbdc.ualr.edu/bizfacts/7018.asp.
Bibliography by the USDA of articles about roadside markets (most are very old), www.ams.usda.gov/
directmarketing/b_6.htm.
Since there is little published information, the best source of information is someone who is selling on
their farm. Use the www.localharvest.org locater to find an on-farm market near you.
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The Georgia Organics Direct Marketing Decision Tool
Resources
CSA (Community Supported Agriculture)
Local guide for starting a CSA in the South, updated as of March 2004, www.ces.ncsu.edu/chatham/ag/
SustAg/csaguide.html.
This website has a very comprehensive list of resources for the CSA farmer and for those considering starting a CSA, www.nal.usda.gov/afsic/csa.
The Robyn Van En Center, founded by one of the pioneers in the CSA movement. A CSA farm locater is
available at www.csacenter.org.
More CSA resources, www.attra.org/attra-pub/csa.html.
Sharing the Harvest, book by Elizabeth Henderson with Robyn Van En. Comprehensive description of the
CSA movement with an emphasis on successfully establishing and operating a CSA. Available from ACRES
USA, 800-355-5313, $25 + $3 shipping.
Rebirth of the Small Family Farm, book by Bob and Bonnie Gregson. A concise handbook for starting a
small organic farm based on the community supported agriculture concept. Available from ACRES USA,
800-355-5313, $10 + $3 shipping.
Internet Markets
Using E-commerce to Add Value to Small Farming Businesses in California, 2002. A description of
California farmers who have developed e-businesses, www.sarep.ucdavis.edu/CDPP/ecommerce.htm.
Direct-Market Farm Products on the Internet, 2002. This may take a while to download – it is about 50
pages, www.ams.usda.gov/tmd/MSB/PDFpubList/internetMarketing.pdf.
Marketing on the Internet, 1999. This is part of a longer document on direct marketing.www.attra.ncat.
org/attra-pub/directmkt.html#internet.
Value-Added Marketing
Keys to Success in Value-Added Agriculture, www.attra.ncat.org/attra-pub/keystosuccess.html.
Adding Value to Farm Products: An Overview, www.attra.ncat.org/attra-pub/valueovr.html.
These two sites have many resources listed for you to explore.
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