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Posts Tagged: direct marketing
Back to Basics
"Over the last several years, I've become convinced that being stuck in the middle scale-wise is incredibly challenging. While I've written about this struggle numerous times, I've never written as concisely or as eloquently as Mr. Parry. "You are," he says, "somewhere between a real business and a self employed Mom and Pop operation. There is never enough money or enough time." By contrast, small operations subsidize their living expenses with off-farm jobs. "You believe in the benefit of what you are doing," he writes. "Because of your belief system, it is worth it.... You have little time and money to spare, but you persevere."
Parry talks about reassessing his farm's assets - his "unfair advantage." In his case, his family decided that it was the fact that they owned "1100 acres of verdant green irrigated pastures that [are] one of a kind in our dry southwest climate." While their livestock operation is going back to a commercial (as opposed to direct-market) approach, the Parry's are "selling the view" - developing agricultural tourism enterprises to compliment commercial sheep and cattle production.
Given our own struggles to come to terms with the challenges of scale, I can imagine that Mr. Parry and his family also resisted the decision to shut down the direct marketing part of their operation. However, his article ends on a positive note. "Fox Fire Farms still has all the livestock.... What has changed is that it is back to low cost, commercial production." Partly because of our ongoing drought, we're headed in the same direction this year - we don't anticipate direct marketing any meat from this year's lamb crop. Parry concludes, "A correctly structured commercial livestock enterprise has a lot going for it, not the least of which is time for life's other priorities." I find this statement especially encouraging as I head out to check sheep before driving to town to watch my oldest daughter's varsity soccer match.
In some ways, the changes at Flying Mule Farm have been forced on us - by the dry winter and by the economic realities of mid-scale livestock production. These last several years have been stressful, as regular readers of this blog will no doubt acknowledge. Mr. Parry's article has helped me realize that we haven't been alone in this struggle. His ability to make positive changes to his operation that allow him and his family to make "time for life's other priorities" is incredibly reassuring and liberating.
Over the coming weeks, I plan to share some of our thought processes regarding our own "unfair" advantages and what they mean for the future of our business. I hope my handful of readers will weigh in with their own insights and experiences! Thanks to Richard Parry for stating the obvious: "Everyone does not have to be a direct marketer of meats."
Marketing Academy on February 15th and 16th
On Friday and Saturday, the 15th and 16th of February, the UC Cooperative extension here in Auburn will be hosting a Marketing Academy which will cover topics ranging from increasing sales at farmers’ markets, to learning about wholesale marketing.
The first workshop (Friday, February 15th, 1-4 PM) will focus on using health and nutritional information as marketing tools to help boost product sales. In the past several months, we at UCCE have been producing nutritional cards for various crops, and distributing them when we do tastings at farmers’ markets. We have seen a tremendous response to this type of marketing and education, and want to ensure that farmers learn about this process and how to incorporate it into their sales operations.
We will kick off Saturday, February 16th (8-Noon), with a workshop about increasing sales at farmers markets. So much of this has to do with relationship building, creating a visually appealing stall, and, of course, brining your best product to market. Most farm operations can always do better in one or more of these aspects, and many farms can improve in all three. This workshop will give practical tips and tricks to help boost those sales.
To conclude the Marketing Academy, on Saturday the 16th (1-5PM), we will have a workshop entitled “How to Break into Wholesale.” This workshop will provide information for growers new to wholesale, as well as for those with some experience with wholesale sales. Farmers markets, as we all know, each have a limit in the volume of sales. Wholesale venues give access to larger markets and the potential for a greater volume of sales. For some operations, wholesale marketing is the key to becoming financially viable. At this workshop, farmers will learn the “ins and outs” of selling to several wholesale buyers, who range from a small local grocery store, to a wholesale distributor.
The importance of marketing in a farming operation should not be understated. Any farm depends as much upon production as it does upon marketing. From choosing an appropriate display for a farmers’ market, to deciding whether or not to engage in wholesale marketing, these decisions have profound effects on the viability of a farming operation.
Come and learn more about marketing and ways to improve your strategies for the impending farming year. For more information and to register for these workshops, click here: http://ucanr.org/sites/placernevadasmallfarms/?calitem=180483&g=22527
How Small is Big Enough?
Small is beautiful, E.F. Schuacher tells us, and Schumacher’s vision of economics at a more human scale certainly resonates with me as a small-scale farmer. From a local food perspective, small farms are held up as a more compassionate, sustainable and responsible alternative to corporate-managed industrialized agriculture. Small, family-owned farms, the theory goes, are more ecologically sensitive than their “industrial” counterparts. As a practitioner of “small” farming, I am philosophically and economically inclined towards this perspective. As someone striving to make my living from small farming, however, I often struggle with the question of scale. Balancing the idealistic goal of staying small with the realistic need to be big enough to earn a living wage is, I think, one of the most critical questions for small farmers.
From a practical standpoint, there are advantages to staying small. On a small farm, the farmer can pay close attention to details that might be lost on a larger operation – details like soil protection and pest detection. Wendell Berry writes that a farm is sized correctly if it can be cared for by the farm family and perhaps by a few seasonal employees. Obviously, this definition means that a right-sized farm will vary depending on the crops produced. For example, our family can properly care for 400 ewes with a minimum of outside help. On the other hand, five or ten acres of vegetables might be the correct size for another operation.
Perhaps by necessity, smaller-scaled farms also have more direct contact with their customers. With fewer units to sell, small farms are driven to maximize their profits per unit, which often means direct marketing. This direct connection means less time between harvest and consumption, which allows small farms to market fresher, better tasting, and more nutritious fruits and vegetables. As a small farmer, I focus more on feeding my neighbors and my community than on the oft-repeated focus on “feeding the world” espoused by the proponents of industrial-scale agriculture.
The romantic notion of making a living from 100 ewes or an acre of mixed vegetables, however, quickly runs up against the realities of scale. Small producers typically have higher unit costs for purchasing supplies, obtaining processing services, transporting products, and other inputs. In some cases, these higher unit costs on the expense side of the ledger partially or totally offset the higher per unit revenues that result from direct marketing. In other words, I receive more per lamb marketed than my large-scale counter parts, but my expenses per lamb are greater as well. Size is related directly to costs. For example, the harvest cost for a lot of 19 lambs is $25 per animal. For 20 lambs, I only pay $20 per animal. A semi load of lambs (400 or so), would cost even less to process. Similarly, a bale of alfalfa costs $14 at our local feed store. If I buy a ton of alfalfa, I save 10 percent. If I purchase a truck and trailer load, the hay costs just $8.50 per bale, and it’s delivered to our place.
Finally, scale matters to customers, too. Buyers like restaurants and retail grocers would generally rather purchase food from a handful of sources rather than from a greater number of small farms. The Farmers Diner, a small New England chain of restaurants committed to buying from local, small-scale producers, can’t afford to pay $7.50 per pound for bacon from a farmer just down the road (the price the farm received for bacon at the farmers’ market). Says Bill McKibben in Eaarth, what Farmers Diner owner Tod Murphy “really requires is not huge commodity producers or small, incredibly wonderful gourmet farms.” Murphy tells McKibben, “What I need are 1950s-size farms” – the mid-sized farms that have disappeared in the last 30 years.
Economically, a farm is “profitable” if its revenue per unit sold is greater than the direct costs of producing each unit. For me, I earn a profit if I can sell my lamb for more than the cost of feed, veterinary care, shearing and processing. Once a farm can sell each unit at a profit, the farm family must determine its total income needs (for things like living expenses, overhead costs, health care, retirement, etc). Is the farm a part-time occupation? Does the family need to derive one or more full-time salaries from the operation? In other words, the farm must operate at a scale that covers its production expenses and its overhead, and that produces a profit for the farm family. While this scale varies by the type of operation and by the farm family’s needs and expectations, it is a question that must be answered correctly for the farm to stay in business.
Our primary activity is the production of grass-fed lamb. We started our business with 27 ewes in 2005. Today (2011) we have approximately 100 ewes. Experience suggests that I could manage 3-4 times as many sheep without a significant increase in labor or land expenses. Economics analysis suggests that 400 ewes would produce enough lambs to generate both a salary for me and a profit for the business. My conclusion is that we are not yet operating at the proper scale, given our goals and financial needs.
While small farms may represent a way to invest labor (instead of or in addition to capital), capital costs take center stage when considering any expansion. The typical return-on-investment analysis is not a sufficient gauge of success on its own. As a small farmer, I don’t have much capital to invest in my operation. I do have my time, knowledge and skills, however. Consequently, I’m far more concerned with how much a specific enterprise or activity will return per hour of my labor. That being said, once I’ve learned the skills necessary for an enterprise, it may make sense to invest enough money to increase the scale of our operation.
Much of the solution lies in making our national food system more equitable to those who produce our food. “We need to be willing to pay our neighbors enough to grow our food that they can make a decent living,” says Bill McKibben (Eaarth, p 178). To be sustainable, agriculture must address three key elements: resource conservation and enhancement, social equity, and economic viability. To ignore any of these three issues is short sited; to ignore economic viability is lethal. A farm that fails economically will ultimately fail to conserve resources and social equity. Ultimately, economic viability requires farms to operate at a scale that provides for profitability.
Posted by Dan Macon, Flying Mule Farm
Opportunities for Getting Started in Farming
Welcome to the Fooothill Farming blog!
Our new website (http://ucanr.org/foothillfarming) has a lot to offer and will continue to expand as we add more information. If you have a question or you have information to share, please contact us at foothillfarming@gmail.com.
If you're interested in starting a small farm or ranch in the Sierra Nevada foothills, this is the time of year to start your quest. In January and February 2011, there are lots of options to learn about small-scale foothill farming and ranching.
If you are just starting to think about farming or ranching, the Beginning Farm Planning class will be useful for you. It's a two session class on January 11th and 13th in Auburn. For more information and to register, go to http://ucanr.org/beginning farm planning.
If you need to learn more about marketing, check out the Sierra CRAFT (Collaborative Regional Alliance for Farmer Training) Marketing and Value-added Workshop on Friday January 14th in Auburn. For more information and to register, go to http://ucanr.org/sierracraft marketing & value added
For lots of options to choose from, consider attending the PlacerGrown Farm Conference on February 5th. For more information and to register, go to http://ucanr.org/placergrownfarm conference
If you've already started farming or ranching but need help with making your business pay, consider the 6-week Farm Business Planning class starting on February 10th. Starting in January, check the UCCE Placer/Nevada website for information and registration.
http://ceplacer.ucdavis.edu/index.cfm
Another event to consider attending is the Nevada County Grown Sustainable Food and Farm Conference on January 22nd. More information at: http://www.nevadacountygrown.org/conference/
For more opportunities, check the Foothill Farming website regularly.
