Development of Good Food Farmers Network: A replicable model of farmer-owned joint marketing and sales

Final Report for FNE15-824

Project Type: Farmer
Funds awarded in 2015: $14,140.00
Projected End Date: 12/31/2017
Region: Northeast
State: New York
Project Leader:
Henry Corsun
Dog Wood Farm
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Project Information

Summary:

We are a group of beginning and experienced farmers developing a replicable model for farmer-owned, collaborative joint marketing and sales that expands markets and increases overall income for sustainable farm operations, specifically targeting small-scale and beginning farmers. Our goal is for this model to be more profitable and accessible than traditional wholesale outlets and less time consuming than selling direct. We specifically seek to support small-scale and beginning farm businesses, anchored by more established operations.

Our work began in 2014 when we created the shared “Good Food Farmers Network” brand, which was further formalized in 2015 through the creation of Good Food Farmers Network LLC. The project started with six participating farms, a single distribution site, and approximately sixty customers. Each season, we have significantly adjusted the model. In 2016, we arrived at a system that worked well. Now, in 2017 and beyond, we will continue to build upon our work and demonstrate our model as profitable, scalable, and replicable.

Development of Good Food Farmers Network has been a very organic process – slow, thoughtful, and reliant on strengthening the system rather than a quick infusion of outside inputs (i.e. non-farmer capital).  One stumbling block continues to be access to technology platforms that meet our needs. Critical features include the ability to enforce a minimum order amount each week and automatic weekly orders. As far as we know, a platform that integrates the front-end and back-end does not exist. 

The document we created provides an overview for how to create a similar model anywhere in the country. The model relies on only $3,000 to $5,000 in start-up capital, not including start-up labor and assuming access to a pre-existing delivery vehicle and admin/packing space. And the model utilizes nationally available online platforms. We include discussion of ownership and legal structure, draft farmer participation questionnaire, a discussion and examples of product standards, prices, and crop planning tools, a discussion of internal logistics and administration, our 2016 income statement, and our 2017 budget.

We will continue to share our work as the project continues. We are grateful to SARE for the farmer-centric capital that was provided to move the project forward. We will continue to work with other farmers and farming communities around the country to replicate and improve upon our work.

Introduction:

Over the past ten years, there has been a notable increase in the technical and business training programs available to farmers in the Northeast. As we work towards building vibrant and sustainable regional food systems, a gap that still remains is the development of farmer-owned marketing channels and distribution services that provide an alternative to time-laden direct marketing and low-price wholesaling. In addition, few existing distribution channels beyond direct marketing specifically seek to support small-scale and beginning farmers.

While many distribution options exist in the Northeast, few are farmer-owned and operated and very few serve smaller scale and beginning farmers. We seek to fill this gap with a replicable model that can be shared and adapted by other groups of farmers. This model is intended to be a complement to other direct marketing channels, such as CSA, farmers’ markets, etc., that builds resilience by diversifying a farm’s outlets without needing to participate in traditional wholesaling.

A 2014 report entitled “Local Food Distribution Study Shares 15 Years’ Experience” highlighted the successes and failures experienced by Community Alliance of Family Farmers. Although California differs from the Northeast, it is worth noting the overarching conclusion of the report which states, “After a more than fifteen-year history in the field of food hubs and local food distribution, the Community Alliance with Family Farmers (CAFF) concludes that new stand-alone facilities and aggregation hubs, unless farmer owned and operated, are not viable enterprises in California” [emphasis added].

Our goal throughout this project has been and continues to be to develop a farmer-owned sales and marketing model particularly geared towards small-scale and beginning farmers that provides greater financial returns than traditional wholesale outlets and requires less time on the part of the individual farmer. In addition, we have sought to create a model that could be replicated in order to more rapidly increase the presence of such farmer-owned distribution across our national food system.

Over the course of our project, highly capitalized, non-farmer owned, purported “farm-centric” companies have failed in the Northeast, namely, the New York City metro-area based operations of Farmigo and Good Egg. Both companies claimed thousands of customers yet failed. From the outside, this seemed largely due to heavy capitalization that fueled growth before developing a logistics model that actually worked.

Other non-farmer-owned companies such as Field Goods continue to focus on larger scale producers who can offer low prices and many such companies also promote “local” food with limited commitment to promoting sustainable farming practices. In addition, as meal-box companies such as Blue Apron have exploded onto the scene their trajectory has been similar – working primarily with larger farms with varying levels of sustainable growing practices.

Project Objectives:

Our work developing Good Food Farmers Network has been based on our group’s shared objectives of:

(1) Profitability: Enhancing profitability for farmers through better prices, coordinated value adding for seconds and surplus crops, and production efficiencies through joint planning;

(2) Quality of life: Improving quality of life for farmers through time and cost savings and strong farmer-to-farmer support, particularly through the participation of more established “anchor farms”;

(3) Rural employment: Creating employment in rural areas through the hiring of administrative and delivery support staff as well as creating viable farm job and entrepreneurship opportunities; and,

(4) Expanding markets: Increasing demand for sustainable agricultural products through increased outreach and marketing efforts achieved through coordination and shared resources with emphasis on “knowing your farmer” and continued direct farmer-to-customer relationships, farm tours, cooking events, and other on-farm activities.

Cooperators

Click linked name(s) to expand
  • Stephen Hadcock
  • Claudia Kenny
  • Jennifer Ronsani

Research

Materials and methods:

To achieve our objectives, we sought to create a farmer-owned, farmer-led model for collaborative distribution of food that would be replicable.

To be replicable, it is important that the model requires limited capital investment and utilizes nationally available resources.

While our particular group, Good Food Farmers, is committed to holistic and regenerative farming practices, the model itself can be used by any community of farmers, regardless of growing practices.

Attached to this report are our findings and discussion that have been made available to the farming community through various outreach efforts. This outreach will continue as we further develop the model.

In creating this model, we considered number of farms served, additional income generated for each farm, prices received by farmers compared to other outlets, general attitudes of participating farms towards the project, number of customers, and total value of purchases.

We also shared our findings in the uploaded publication, which includes discussion of ownership and legal structure, draft farmer participation questionnaire, a discussion and examples of product standards, prices, and crop planning tools, a discussion of internal logistics and administration, our 2016 income statement, and our 2017 budget.

Research results and discussion:

Number of farms served

We met our goal of working with at least a dozen farms, and this number continues to grow. We have developed an important mix of farms:

– Core group farms (6) that supply the bulk of the items each week and are directly involved in planning and decision-making

– Crop specific farms (6+) that supply specific items for a limited number of weeks each year and have limited participation in decision-making (except for setting prices whereby each farm is integral to the conversation)

– Anchor farms (3+) that can be called upon to fill gaps or help recover from production challenges along the way and are also better positioned to invest capital or other resources to help the project succeed

Additional income generated for each farm

In 2015, we generated $65,000 in sales from 100+ members with an average weekly spend of $23. In 2016, we dropped two sites, significantly modified the model, and generated $65,000 again in sales with half the membership but an average weekly spend of $45. In 2017, with an only slightly revised model, we expect to generate $120,000 to $240,000 in sales with 80 to 160 members and an average weekly spend between $45 and $60. Of the $65,000 generated in 2016, approximately $45,000 was paid out to participating farms. In 2017, farmers will receive approximately 72% of the retail price.

Prices received by farmers compared to other outlets

The core group has set prices that are approximately 28% below retail, which equates to a 39% markup that Good Food Farmers retains for admin, marketing, and logistics. The markup began at approximately 20%, which was unworkable and rose steadily each year to the current level of 39% where it has stabilized. As Good Food Farmers scales up, it is possible that this percentage will decrease and prices for participating farmers will rise. However, even now, the prices received by the participating farms are above conventional wholesale, wherein the distributors and retailers each take a sizable cut of the retail price.

Our farmer-centric model means that pricing always starts with the farmers involved. We consider costs of production, savings by not having to sell direct, and the retail prices charged for each item at farmers’ markets and grocery stores in our distribution areas. Prices paid to farmers vary by item from about 5% to 35% above regional wholesale markets. Some examples – Farmers receive $1.25 for head lettuce compared to $1/head, $2.20 for bunched greens compared to $2/bunch, $7.25 for ground beef compared to $6/lb, and $10.50 for mushrooms compared to $8.25/lb.

General attitudes of participating farms towards the project

Although growth has been slow, farmers remain enthusiastic for the future. All farms regard Good Food Farmers as a favorable outlet and a meaningful outlet to have in their sales mix.

Number of customers

Developing the model has proven challenging, and it was decided early on to slow the growth in membership until the model could be improved. 2016 marked the implementation of a successful model that, with minimal tweaks, will be replicated in 2017 and beyond. We intend to grow from 55 members in 2016 (purposefully down from 110 members in 2015) to between 80 and 160 members in 2017. At 160 members and a longer season of deliveries, we will achieve over $240,000 in sales.

When we started this project, we felt that 300 customers with $250,000 in joint sales would be the minimum required to create a viable venture. The $250,000 number remains true; however, based on how our model has evolved, we will be able to accomplish financial viability with approximately 200 customers, rather than 300. Further growth will result in farmer-controlled profits that can be reinvested in the business, returned to the participating farms, spent on shared equipment or other shared resources, or directed towards food justice and food access initiatives.

Total value of purchases

A critical component has been adjusting members’ weekly average spend. Originally, when we had a fairly traditional box program, the average weekly spend per member was $23. In 2016, we shifted to a fully customizable and highly flexible platform and required a minimum weekly spend of $45 per member.

Sales to other outlets

In 2015, we experimented with including wholesale orders in our delivery services for member farms. However, it proved too complicated to manage at that early stage of development.

Now that the retail program is established, we are revisiting developing a model for including bulk purchases on our ordering platform and in our logistics. This will most likely operate by farms listing case availability, receiving payments directly, and paying Good Food Farmers a delivery fee for the order; however, this is highly subject to change as this aspect is only now being developed.

Another aspect of the project that was delayed has been the coordinated preserving and processing of value added foods. These foods have always been intended to provide items for winter deliveries. 2017 represents the first year that Good Food Farmers will continue though the winter months. We are actively crop planning for that reality and putting plans into place for summer food preservation as well as prepared foods. Ingredients will be purchased and processing coordinated and paid for by Good Food Farmers. This is projected to amount to $15,000 to $20,000 of retail sales during the 2017/2018 Winter Season.

Documenting the model

The attached document provides an overview for how to create a similar model anywhere in the country. The model relies on only $3,000 to $5,000 in start-up capital, not including start-up labor and assuming access to a pre-existing delivery vehicle and admin/packing space. And the model utilizes nationally available online platforms. In the attached document, we include discussion of ownership and legal structure, draft farmer participation questionnaire, a discussion and examples of product standards, prices, and crop planning tools, a discussion of internal logistics and administration, our 2016 income statement, and our 2017 budget.

Participation Summary

Education & Outreach Activities and Participation Summary

Participation Summary

Education/outreach description:

We have participated in a number of outreach activities to promote our work and to foster dialogue around farmer-owned collaborative marketing.

Hilary Corsun, Principal Investigator, presented at several events including:

  1. Cornell Agribusiness Strategic Marketing Conference, “Developing your Brand and Marketing Strategies to Increase Sales” (2015)
  2. Cornell Cooperative Extension Young Farmers Workshop, Panel Discussion (2017)
  3. Just Food Conference, New York City, “The Evolving CSA Landscape: Presentation and Conversation about CSA and Good Food Farmers Network as a Developing, Complementary Model,” presented with Claudia Kenny of Little Seed Gardens / GFF Core Group Member (2017)

We have posted our publication to the Good Food Farmers website which can be found at: GoodFoodFarmers.com/for-farmers

We will continue to present at conferences and workshops and host farmer meetings to help further the conversation around farmer-owned collaborative marketing and other opportunities for farmer-owned, collaborative enterprises. We intend to continue to update our materials as Good Food Farmers evolves and will remain a resource for other farming groups.

Project Outcomes

Assessment of Project Approach and Areas of Further Study:

Future Recommendations

There is plenty more work to be done in developing our alternative, farm- and community-centric food systems and farm support infrastructure, and we are tremendously grateful to Northeast SARE for supporting this work.

One stumbling block continues to be access to technology platforms that meet our needs. CSAware comes close but we are certainly pushing its limits. Hopefully, growth of Good Food Farmers will inspire CSAware to make improvements. We remain on the lookout for other options. Critical features include the ability to enforce a minimum order amount each week and automatic weekly orders. CSAware also does not currently integrate the ordering platform with back-end purchase orders, etc. As far as we know, a platform that integrates the front-end and back-end does not exist. CSA platforms tend to focus on the front-end, member-facing side whereas food hub platforms focus on back-end logistics with minimalistic front-end features. We chose a platform that emphasized the front-end as positive member experience is critical.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.