WASHINGTON, February 29, 2012 -Selling farm products directly to consumers through on-farm sales, agritourism, farmers markets and CSA operations will only continue to grow with the next generation of farmers, according to Farm Credit Council (FCC) Vice President of Young, Beginning, Small Farmer Programs and Outreach, Gary Matteson.
“Enough data exists to show that there is a significant trend towards retail and consumer-oriented agricultural marketing practices,” he said. “Policy proposals for the next Farm Bill should laythe groundwork for better understanding this sector.”
The economic impacts of these activities are not measured, but direct-to-consumer sales is a marketing strategy employed by 136,000 farms with a total productive value of more than $8 billion in 2007, according to research by Matteson and Alan Hunt, with the Centre for Rural Economy.
The direct-to-consumer concept is enthusiastically embraced by members of “community supported agriculture” operations, or CSAs. In a CSA business model, a farmer offers a certain number of "shares" to the public. Typically the share consists of a box of produce and other farm products. Interested consumers purchase a share and in return receive a box of seasonal produce each week throughout the farming season.
Erin Schneider, the owner of Hilltop Community Farms LLC, in Wisconsin, uses the CSA operation she and her husband own as supplemental income to their off-farm careers. Incorporated as a farm business in 2009, their small-scale CSA has twelve member-families that buy shares in the farm’s array of annual and perennial crops, with an emphasis on fruits.
“Having a diversity of crops serves as our insurance,” she said. They also have 25 acres enrolled in the Conservation Reserve Program and a couple more in the Wildlife Habitat Incentives Program (WHIP). The Schneider family’s motivation for their community farm is largely driven by a desire to grow sustainably “from an ecological, economic, and social standpoint.”
Schneider’s farm is in La Valle, Wisconsin, an area heavily populated by CSAs. She said her farm is not certified organic because the certification fees didn’t fit with her small-scale business plan. However, her farm follows organic principles and her small community of members knows how they grow and farm each product.
Organic producers are not the only farmers to use retail agriculture to their benefit. Many large- scale and conventional operations are using “on-farm diversification” as a way to market their products and support their net income.
Matteson described a young farmer who managed five acres as a greenhouse and retail operation, while his family’s entire farm produced corn, soybean and hogs. During a notably rough year for pork, the 7,500-acre soybean, corn and pork farm had 90% of its net income generated by those five acres. They were selling direct-to-consumer greenhouse products and pork through the retail operation for a profit, Matteson said, while they lost on every hog being sold out the back door through the wholesale channel.
“This activity of selling direct-to-retail is not uncommon; it is just small,” Matteson said. “In aggregate, it amounts to something.” That concept is illustrated by a map derived from U.S. Ag Census data, which indicates that many U.S. counties have fewer than ten CSA operations, but those counties make up almost 90 percent of the map.
Despite some surveys and anecdotal examples, data on “retail” agriculture is inadequate to allow groups like the FCC to confidently
track where this trend is heading. However, young farmers’ interest in online marketing and entrepreneurship makes Matteson think retail agriculture will continue to grow.
“Young farmers are willing to engage in this and use communication skills to open those markets,” he said. “Young people who grew up in the internet age are finding ways to capitalize on those skills.”
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Original story printed in February 29, 2012 Agri-Pulse Newsletter.
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