Diversification through farmers' markets benefits small, and large scale growers

Chris Lewis, the Capital Press, 10/26/2001

Farmers' markets are now recognized as a valuable direct marketing outlet for many of the nation's small-scale farmers. Their expansion from fewer than 100 nationwide in the early 1970's to more than 2,800 markets, involving more than 6,000 farmers, according to USDA statistics, attests to their popularity and success.

Farmers' markets provide consumers in both urban, and rural communities with fresh, locally grown produce, specialty products, meats, dairy, fish, baked goods, handmade crafts and more.

But just how much money can a farmer make through farmers' markets and direct marketing?

One farm, in a recent survey of California farmers' market vendors conducted by the University of California Davis Sustainable Agriculture Research and Education Program, reported annual gross sales of $1.75 million, with only 75 acres in production.

Farm sizes of the over 200 part-time and full-time growers who responded to the survey ranged from 0.1 to 5000 acres, with 50 percent of the respondents operating on 10 acres or less.

Growers on 10 acres or less averaged annual gross sales of $30,000 in 1998, with $20,000 of that coming from farmers' market sales alone.

Growers who farmed more than 10 acres reported significantly greater annual gross sales, averaging $278,000 in 1998, with farmers market sales alone contributing $80,000. Although larger farms did generally report higher sales, two of the top five farms for reported gross sales were on fewer than 100 acres.

Key to success
The key to these small farm successes seems to be diversity in both product line and marketing strategy. Farmers' markets provide a number of opportunities for interested growers to expand their existing businesses, or start new enterprises, in a relatively low-cost and supportive environment. Seventy-seven percent of the vendors surveyed by the UC-Davis study in 1999 reported that farmers' markets provided them with the best opportunities to start and grow their businesses.

Farmers' markets not only bring growers into direct contact with customers, including restaurant owners and other produce buyers who frequent markets, but also exposes them to what other people like themselves are doing with their land based businesses. Even larger growers, with more of a wholesale marketing focus, find farmers' markets an important link to the consumer.

These connections provide them with valuable opportunities to test-market new crops and value-added products as well as to research customer preferences.

Some of the diversification strategies farmers' market vendors develop focus on making connections within the community that hosts the farmers' market. These include marketing to local restaurants and produce stores as well as building a community supported agriculture or CSA program, where individuals, families and even other businesses receive produce on a subscription basis.

These types of diversification make trips to market more profitable, adding other direct sales to those made during the market.

Building these relationships, though, takes time. Most vendors expand over a few years, using farmers' markets to build their experience and production capacity, as well as to make the necessary new business contacts.

Adding Value
Another diversification tool useful for small-scale growers is value-added processing. Adding value to an existing agricultural product can include minimal processing, such as sorting for size and grade, or it can refer to more advanced processing such as canning, drying and producing, ready-to-eat sauces and dressings. Adding value also adds cost to production, but careful planning and test marketing can significantly increase the net cash return of a small-scale agricultural enterprise.

Mary Wellington, of Santa Barbara, Calif., found this to be true when she turned her otherwise marginal 20 acres of citrus into a thriving marmalade and preserves business that not only keeps her busy, but provides a job for her teen-age daughter. In addition to adding to the cash value of the product, further processing such as drying and preserving, makes agricultural products more suitable for transport through the mail. This opens up another valuable diversification tool for small-scale growers, mail-order sales.

Mail-order and internet sales give consumers, a chance to enjoy their favorite agricultural products, even when they are unable to make it to a farmers' market. Many small-scale growers at the rural Laytonville-Certified Farmers Market, in Northern California, said that though the volume of sales at the market was low, the business connections and exposure to passing tourists made participating important. Most of them offer products available through the mail, and provide customers with an order form. They recommend labeling include contact information with a phone number, and e-mail address. A website URL also helps to promote this type of marketing.

Agritourism Venues
Many growers who market directly to customers have benefited from developing on-farm marketing opportunities. These venues are sometimes called agritourism, and include U-picks and farm festivals with themes appropriate to the region, crops or season. Farm stands and pumpkin patches are a few more agritourism activities that are especially useful to growers whose farms are prominently located on or near major thoroughfares.

While these activities are not new, they seem to be gaining in popularity, and farmers' markets provide growers with an opportunity to advertise their on-farm businesses to an audience already interested in purchasing direct from growers.