Subject: Farm SAd News 7-16-94
From: [email-masked] (IATP)
Date: 18 Jul 1994 22:41:51 -0000
Newsgroups: alt.sustainable.agriculture

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FARM AID NEWS
Volume 2, Number 15
Monday, July 16, 1994
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Headlines:

-FAMILY FARMERS EXPLORE DIRECT MARKETING TO SECURE LONG
  TERM SURVIVAL
-DIRECT MARKETING PUTS MORE MONEY IN FARMERS' POCKETS
-OBSTACLES PREVENT FARMERS FROM DIRECT MARKETING
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FAMILY FARMERS EXPLORE DIRECT MARKETING TO SECURE LONG-
TERM SURVIVAL

Reduced real commodity prices combined with rising farm input 
costs, consumer demands for safe food and the continuing trend in 
agriculture toward consolidation and contract farming have forced 
many family farmers to search for marketing and production 
alternatives.  

Direct marketing is a successful alternative being explored by many 
family farmers throughout the United States. A number of family 
farmers have stopped selling to traditional marketplaces and instead 
are processing  flour, cereals, meats and dairy products.  Farmers 
then direct market these and other products, like vegetables, fruits 
and herbs, to local consumers through retail operations, mail-order 
catalogues, farmers' markets, and Community Supported Agriculture 
(CSA) programs. 

By direct marketing their products, farmers are able to pocket a 
greater share of the food dollar by eliminating middlemen.  
Middlemen, who include processors, distributors, wholesalers and 
retailers, consume 74 percent of the food dollar -- leaving farmers 
with an average of 26 cents in their pockets, compared to 37 cents in 
1980, for every dollar spent on food at the store.  
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DIRECT MARKETING PUTS MORE MONEY IN FARMERS' POCKETS

Farmers' Markets:  Farmers' markets are one popular form of direct 
marketing.   In thousands of cities and towns throughout the United 
States, over 2000 farmers' markets offer consumers a rainbow of 
fresh fruits, vegetables, herbs and flowers at reasonable prices, while 
giving farmers the opportunity to pocket 100 percent of the 
consumers' food dollar.  

Markets take place almost everywhere -- in church parking lots, 
town squares, and roadside clearings.  Some markets are organized 
by farmer-run cooperatives while others are funded and set-up by 
Chambers' of Commerce, city governments and non-profit 
organizations.   Markets range in size from a handful of producers 
who gather one time a week to week-long markets with several 
hundred producers.
 
Community Supported Agriculture (CSA): CSA is another form of 
direct marketing practiced by growers.  More than 400 CSA farms 
are currently supported by members of  local communities who buy 
shares in a farm.  In exchange for their investment of between $200 
and $500 each season, share-holders receive weekly deliveries of 
fresh produce from farmers, including fruits, vegetables and some 
meats and herbs throughout the summer and fall.  When customers 
sign up, they are usually given an information packet and harvest 
schedule.  

Shareholders are required to make their investment prior to farmers' 
planting season.  This arrangement provides farmers with the 
needed capital to purchase spring planting inputs.  

In addition, by paying in advance of delivery, customers share the 
financial risk of farming with the growers.   Shareholders' one-time 
seasonal investment is not refundable should adverse weather 
conditions, such as last year's flood in the Midwest, result in reduced 
crop yields.  

"In a sense, it is gaining consumer support for the farming project 
and letting them have responsibility in the foods they eat," says 
Melody Newcombe, a CSA farmer in Kingston, N.Y. 

Mail-Order Marketing:  Mail-order marketing is a third direct 
marketing option practiced by family farmers.  Like other 
businesses, some farm families have started selling products, like 
cheese, fruits and cereals, through the mail. Catalogues are now 
available from family farmers throughout the country.   

Restaurants and Cooperative Grocery Stores: A growing number of 
family farmers have successfully marketed their products to local 
restaurants and cooperative grocery stores.  These retail outlets are 
often eager to purchase directly from family farmers who can 
guarantee prompt delivery of fresh, locally grown or organic 
produce. 

Most farmers who market to restaurants and cooperatives offer 
products that have been harvested and delivered within 24 hours -- 
making their products a uniquely fresh alternative in a marketplace 
where food usually travels thousands of miles before it is eaten.

Farmers who sell directly to restaurants can earn a premium above 
normal crop prices.  In addition, farmers who produce organically 
can gain a premium above wholesale prices for providing fresh 
organic products that accommodate restaurant and shopper food 
preferences.

Home-Delivery:  Some family farmers have made the time to not 
only grow, harvest, package and market their products, but also to 
deliver their products to customers' homes on a regular basis.  This 
form of direct marketing allows farmers to capture an even greater 
share of the food dollar by providing customers with the ultimate 
convenience of having fresh fruits, vegetables, and milk and other 
dairy products delivered to their doorstep. 
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OBSTACLES PREVENT FARMERS FROM DIRECT MARKETING

Although direct marketing has helped thousands of family farmers 
attain a higher percentage of the food dollar, it is not the solution for 
all farmers.  Knowledge, time and financial constraints prevent the 
majority of traditional crop farmers from marketing their own 
products and earning a viable living on their land. 

Knowledge: Because direct marketing is based on niche markets and 
is a relatively new component to family farming, most farmers must 
expend a lot of time researching and learning how to process and  
market their products.  Many farmers begin their direct marketing 
and processing endeavor on an ad-hoc basis: trial and error, reading 
journals, contacting suppliers with questions and occasionally 
reaching out to other, successful producers for advice.  "It's a whole 
new set of skills that you generally don't learn on the farm," says 
Ralph Hilgendorf of Whole Grain Milling Co. who processes and 
markets his own grains. 

Time:  In order to eliminate the middleman, farmers wind up doing 
all the work themselves - growing the food, processing or packaging 
the raw product to boost its value and make it sellable, and 
developing and carrying out a marketing plan.  This means that 
family farmers, many of whom already work off-farm jobs to 
survive, will need to put in additional hours to market their 
products.  

Money: Farmers who make the decision to process and market a 
product must invest in new equipment, product inputs and 
advertisements and brochures. Ralph and Doug Hilgendorf, for 
example, spent approximately $100,000 four years ago on initial 
start-up costs to begin milling and marketing their own crops.   

Federal and state governments must bear greater responsibility for 
the future of America's food system by supporting family farmers' 
marketing efforts and making it possible for more traditional 
producers to earn a viable living.  

In the short-run this will require the federal government to adjust 
price supports upward to cover farmers' costs of production.  Only 
then will the majority of farmers have enough time and resources to 
devote to direct marketing.  In the long-run the USDA and extension 
agencies must provide farmers with access to  financial and 
educational opportunities that will allow them to add value to their 
products by direct marketing and processing.
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Next Edition of Farm Aid News: Examples of farmers who are 
successfully marketing to local consumers.
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Sources: "Community Supported Agriculutre," SAFE FOOD NEWS, 
Witner, 1993;  "The Facts About Food Spending," FOOD INSTITUTE 
REPORT, October 11, 1993; Telephone interviews with: Ted Spitzer, 
PUBLIC MARKET COLLABORATIVE, July 15, 1994; Mark Winne, 
NATIONAL ASSOCIATION OF FARMERS' MARKETS PROGRAM, July 15, 
1994; Ralph Hilgendorf, WHOLE GRAIN MILLING CO., July 12, 1994.
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We welcome comments and suggestions: contact Harry Smith at 
FARM AID, (617) 354-2922.  We encourage the reproduction of 
FARM AID NEWS.  Produced by The Institute for Agriculture and 
Trade Policy (IATP) for FARM AID.   Editors: Gigi DiGiacomo and  
Harry Smith.  For information on other agriculture bulletins, contact 
IATP: (612) 379-5980.
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