The Opportunity to Sell Locally-grown Produce Locally

Photo by: David Rosen, West Seattle Herald

 

The West Seattle Washington Farmers Market held each Sunday throughout the year.

The idea of truck farming has been around for years. 

A local farmer grows vegetables and other crops, harvests them then sells them directly in a local market which can be a village, town or city.  This is the way the business of agriculture operated for the ten thousand years or so that have passed since humans moved from a hunter-gatherer economy and settled in fixed places.  Large agri-business companies changed this pattern between the end of the 19th century and now which has made it possible for a small percentage of the world’s population to feed the rest of us but tends to separate the local buyer from food producers.

The local food movement of the past decade demonstrates that there is a market for farmers and other food producers to locally grown vegetables and other farm products. 

A new study published earlier in March 2013 in the Journal of Agriculture, Food Systems and Community Development finds that “farmers who really made a conscious decision to sell local and more of a commitment tended to do better than those who are just testing the waters with local direct selling.”

Now this makes sense as it applies to any business; if an entrepreneur doesn’t make a commitment to a market he or she is less likely to succeed. 

“Farmers who only test the idea of selling to local restaurants tend to either never try to reach the local market, or quickly opt out of local selling.”

~ Amit Sharma, study author,

Associate professor of hospitality management, Penn State.

 

According to the study, farmers can capture additional revenue through higher prices and improved sales margins.  "Other research conducted by our team,” Sharma continued, “finds that 40 percent or more of people will pay a premium for identified local ingredients."

 

To develop a local market, Sharma said, farmers should first meet with chefs and shop owners. They can learn what types of products these local businesses need and what they would be willing to pay for the items.  Farmers should ask the restaurateur to identify where menu ingredients come from.  Once the restaurant operator agrees to purchase local products, farmers should request that the restaurant post or make available marketing materials or information about where diners can purchase these products.

 

A study published in May 2008 issue of the American Journal of Agricultural Economics suggests that the average supermarket shopper is willing to pay a premium price for locally produced foods.  The study also showed that shoppers at farm markets are willing to pay almost twice as much extra as retail grocery shoppers for the same locally produced foods. Both kinds of shoppers also will pay more for guaranteed fresh produce and tend to favor buying food produced by small farms over what they perceive as corporate operations, according to the study.

 

In the 2008 study, the average retail shopper was willing to pay 48 cents more for strawberries produced locally, and shoppers at farm markets were willing to pay 92 cents extra. With the base price in 2005 for a quart of berries set at $3, farm market shoppers were willing to pay almost a third more for the local produce.

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 According to the Farmers Market Coalition, there were approximately 1,755 farmers markets in the United States in 1994. By 2010 their numbers have more than tripled — to at least 7,800. In excess of 3 million consumers shop and more than 70,000 farmers sell at these markets annually. The United States Department of Agriculture estimates that these markets generate an estimated $1.5 billion in consumer spending each year.

For more information on the Farmer Market Coalition, visit their website at farmersmarketcoalition.org

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The Entrepreneur's Bookshelf ~

The more you know about small business management and financing before you start, the more likely you are to succeed.  That's why I urge anyone thinking of starting a business to contact their local Small Business Development Center or Community College.  I have also organized this bookshelf for you at Powell's Books, the world's largest single site new and used bookstore, featuring the latest books on small business start-ups, marketing, and small business money management.   

A Selection Related to this Post:

A Farmer's Guide to Marketing the Direct-Market Farm
by Julie Murphree

 

 

Click on this link to see ~

The Entrepreneur's Bookshelf

 

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Story sources:

 

Amit Sharma, Catherine Strohbehn, Rama Radhakrishna, Allan Ortiz. Economic Viability of Selling Locally Grown Produce to Local Restaurants. Journal of Agriculture, Food Systems, and Community Development, 2012.

 

Co-authors of the 2008 study were graduate student Kim Darby, outreach program leader Stan Ernst and Professor Brian Roe of Ohio State’s Department of Agricultural, Environmental and Development Economics, supported by the National Research Initiative of the U.S. Department of Agriculture, the Fred N. VanBuren Program in Farm Management at Ohio State, and the Ohio Agricultural Research and Development Center.