Document Type

Business/Farm Finances

Publication Date

8-2002

Abstract

Direct farmer-to-consumer marketing includes any method by which farmers sell their products directly to consumers. Justification for establishing a direct farmer-to-consumer marketing outlet is based primarily on the producers’ desire to increase the financial returns from farm production by (1) reducing marketing costs (and capture profits) attributed to intermediaries (middlemen) in the supply chain, and (2) capitalizing on the desire of consumers to buy (and willingness to perhaps pay a premium for) riper, fresher, higherquality fruits and vegetables. However, if growers expect to receive prices similar to those at retail outlets, they must provide the same value of services consumers have come to expect from other retailers and wholesalers. At a retail store, the price consumers pay for produce generally covers the costs of producing, grading, packing, transporting, wholesaling and retail merchandising. To receive higher net returns, direct marketers must either provide the marketing services at a lower cost, provide services not available through other markets and/or eliminate certain unnecessary services.

Operators of small farms may find that direct marketing translates into additional income when there is insufficient volume or product selection to attract large processors and/or commercial retail buyers. Thus, direct marketing may be the only viable marketing alternative for small farmers. A substantial number of producers use direct marketing channels to augment sales to wholesalers, retailers and processors to reduce the risk of relying on a single market channel.

Although additional income is the primary motivation for direct marketing, several other factors may influence the producer’s decision. Flexibility and the ease of market entry associated with direct marketing operations enable almost anyone with the desire and a few acres to become involved. Many producers favor direct marketing, especially pick-your-own operations, because of the reduced labor requirements associated with not having to harvest, grade, sort and pack produce. However, the most attractive aspect of direct marketing to some farmers is the opportunity to own their own business, be their own boss and do their own thing. This flexibility allows them to determine their own product mix and to balance this production between consumer demand and individual talents for selling and market management. Direct farm-to-consumer marketing allows many producers to capitalize on individual strengths (e.g., good location) to achieve increased income.

Publication Number

PB1711-5M-8/02 E12-4115-00-003-02

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