There's no question that opportunity knocks for farmers involved in the "local food" movement, but there are challenges as well. Growth in the market sector is taking place as more and more consumers commit themselves to buying food grown locally.
Until fairly recently, however, much of the material available to farmers wanting to enhance their approaches to the marketplace has been based on conjecture or philosophical orientation: Local food is safer, healthier, better when it comes to reducing climate change, and better-looking and tasting. All that might be true, but it's not much help to the farmer seeking to enhance profitability by marketing more effectively in a competitive arena. Better marketing efforts are vital, because data show that many farms "selling local" do not receive even a minimal amount of fiscal reward.
Recent work by the U.S. Department of Agriculture (USDA) and others is beginning to provide answers to some of the questions posed by those serious about exploiting the niche market represented by the concept of local food. Using approaches indicated by recent USDA research, farmers can develop the marketing ideas needed to expand markets and tap into the significant growth potential of the local food movement.
What is local food, and what does it mean for your marketing effort?
A 2010 report by the USDA, "Local Food Systems: Concepts, Impacts, and Issues," looked at the concept of local food and found no consensus regarding what the term "local" really means to people. While the report found that the term generally has a geographic connotation, there is no general agreement regarding the distance between a product's origin and the consumer of that product.
According to the 2008 Farm Bill, an agricultural food product can be considered a locally or regionally produced product if it is grown within 400 miles of the point of sale or is grown within the state in which it is sold. In a large state like California, that could mean food grown 1,000 miles from the point of sale could be considered local.
Consumer attitudes also factor into the equation. Food sold at farmers' markets, roadside stands and other outlets considered to be local by consumers may originate thousands of miles away (spices, for example). It can be repackaged and sold at a local market to take advantage of the image the customer has of the place where it is sold.
A 2004 study of the local food phenomenon, "Place, Taste, or Face-to-Face? Understanding Producer-Consumer Networks in 'Local' Food Systems in Washington State," was done by university researchers Theresa Selfa and Joan Qazi. The study pointed to the lack of consensus regarding what is local in investigating food production and sales in Washington state's Chelan, Grant and King counties, where the heavily populated King County, with Seattle as its largest city, is 175 miles or more from production sources in the two eastern counties of Chelan and Grant.
The authors say, "The data suggest that the extent to which consumers factor in environmental sustainability, supporting local farmers, price or nutritional value in making purchasing decisions might vary across county, class, ethnicity or income level, but for an overwhelming majority of consumers in urban and rural regions in Washington state, taste and freshness are very important attributes in how they make purchasing decisions and in what 'local' food connotes to them."
In other words, if it looks local and tastes as though it could have been grown or produced in close proximity to where it is sold, and is presented in a context that suggests local, it is likely to be accepted as being local, with little regard given to the actual point of origin of the product as long as top quality and good taste are provided.
"This is a significant finding for scholars and activists committed to increasing the proximity of producers and consumers to their food supply, and in the sustainability of that supply," Selfa and Qazi continue. "And it is relevant for small farmers trying to sell locally and reconnect with consumers through shortened food chains."
If you're marketing local food, you should consider:
. The potential for expanding your marketplace beyond what you may have considered to be possible in the past. The "foodshed" you serve is not bound by some arbitrary distance from field to consumer; it is bound by the area you can economically serve with fresh, good-tasting product.
. The potential for branding your products in a way that emphasizes their local aspect even in more distant markets. In Washington state, for example, most melons sold in western Washington's farmers' markets and farmstands are grown 150 miles or more away in eastern Washington. So if you grow melons, branding them as "locally grown in Yakima County, Washington" fully informs the consumer while still emphasizing the local element, even if the melons travel 200 miles to market. It also enhances the prospects for sales to consumers specifically looking for local foods who may not have chosen your product without the emphasis on local.
The characteristics of the marketplace
The local food marketplace is dominated in terms of numbers by very small producers, but dominated economically by larger-scale producers. Local food comes to the marketplace via a half-dozen or more channels including CSAs, farmers' markets, farmstands, you-pick, intermediated systems (brought to the consumer through indirect channels) and others. The market for local foods is growing rapidly, but remains a small part of the total agricultural production in the U.S. Perhaps most importantly from the marketing standpoint, small farmers are not getting much of the action when it comes to local foods.
In November 2011, the USDA's Economic Research Service released a report by Sarah A. Low and Stephen Vogel. "Direct and Intermediated Marketing of Local Foods in the United States" sheds some light on the shape of the local food movement.
According to the report (http://1.usa.gov/16AxJRK
. Marketing of local foods through direct- to-consumer and intermediated channels grossed $4.8 billion in 2008--about four times higher than estimates based solely on direct-to-consumer sales.
. Farms marketing food commodities exclusively through intermediated channels reported $2.7 billion in local food sales in 2008--over three times higher than the value of local foods marketed exclusively through direct-to-consumer channels, and two times higher than the value of local foods marketed by farms using a combination of direct-to-consumer and intermediated channels.
. Small farms--those with less than $50,000 in gross annual sales--accounted for 81 percent of all farms reporting local food sales in 2008. They averaged $7,800 in local food sales per farm and were more likely to rely exclusively on direct-to-consumer marketing channels, such as farmers' markets and roadside stands.
. Midsized farms--those with gross annual sales between $50,000 and $250,000--accounted for 17 percent of all farms reporting local food sales in 2008. They averaged $70,000 in local food sales per farm and were likely to use direct-to-consumer marketing channels alone or a mix of direct-to-consumer and intermediated marketing channels.
. Large farms--those with gross annual sales of $250,000 or more--accounted for 5 percent of all farms reporting local food sales in 2008. They averaged $770,000 in local food sales per farm and were equally likely to use direct-to-consumer channels exclusively, intermediated channels exclusively, or a mixture of the two.
. Large farms accounted for 93 percent of the value of local food sales marketed exclusively through intermediated channels.
. For small and midsized farms with local food sales, more operators identified their primary occupation as farming and devoted more time to their farm operation than operators of similarly sized farms without local sales.
. Vegetable, fruit and nut farms dominated local food sales.
. Direct-to-consumer sales of food commodities were affected by climate and topography that favor fruit and vegetable production, proximity to farmers' markets and neighboring local food farms, and access to transportation and information networks.
. The value of locally sold food is highest in metropolitan areas and is geographically concentrated in the Northeast and on the West Coast.
Additional illumination is provided by a 2009 USDA Agricultural Marketing Service publication by Adam Diamond and Ricardo Soto, "Facts on Direct-to-Consumer Food Marketing" (http://1.usa.gov/Lg1af
). According to the publication, "Farms with more than $50,000 in direct-to-consumer sales accounted for only 2.8 percent of the total number of farms who sold directly to consumers, but they captured 58.1 percent of all direct-to-consumer farm sales. Farms with annual direct-to-consumer sales below $5,000 captured 11.7 percent of the direct marketing sales while representing 77.4 percent of farmers engaged in direct marketing.
What does it mean?
Seventy-eight percent of farmers selling local products aren't making even a small living, even as the marketplace for local food is expanding. The largest part of the market is not involved in direct sales of local food to the end user, but rather in selling product to people ultimately selling that product to others.
To improve sales and begin to be more profitable, small-scale producers might consider the following:
. Even a CSA or other small-scale producer can become a participant in the intermediated market. For example, if you can produce more than you are selling as a CSA or at a farmers' market booth, consider approaching local restaurants or small grocers with CSA-like offers. You would benefit by expanding sales, and the business you sell to benefits by the ability to promote the product as "local" or "slow" food. Just make sure you can regularly provide the foodstuff you've promised, and make sure it is fresh and tasty.
. Metropolitan areas provide a large number of customers with the desire to purchase local foods and the financial ability to act on what they want. If you have a CSA or a farmers' market booth in a small suburban town, consider expanding your marketing efforts with approaches, either intermediated or direct, to larger cities that might be within economic reach of your production area.
. Economies of scale work. Consider cooperative efforts with other suppliers in your area that could provide the volume needed to expand your market area or attract more outsiders into your market area on a regular basis.
In some ways the local food phenomenon is, in terms of profitably growing and selling agricultural products, overrated. Incomes are small, time commitments are high, and competition with lower-priced offerings available at traditional outlets is fierce. At the same time, the local food movement may be in its infancy, with continued rapid growth on the horizon, so considerable opportunity exists for growth. In the local food marketplace, providing the customer with a tasty, quality product is a minimum; everybody strives to provide that. The key to success is ignoring the hype and realistically approaching the market in ways that allow you to optimize profitability.
The author is a longtime freelance contributor to Moose River Media.
Photo 1 by KyleJones/morguefile.com.
Photos 2, 3 and 5 by Jack Petree.
Photo 4 by Skinny2/morguefile.com