Enterprise benchmarks for direct-to-consumer farm marketers

Final Report for ONE07-068

Project Type: Partnership
Funds awarded in 2007: $9,101.00
Projected End Date: 12/31/2008
Matching Non-Federal Funds: $1,775.00
Region: Northeast
State: Pennsylvania
Project Leader:
John Berry
PSU, Cooperative Extension, Lehigh County
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Project Information

Summary:

Detailed planning and analysis are required for business start up, management and growth. An essential backstop to these activities is a knowledge base that allows managers to identity and evaluate configurations that offer improved efficiency, productivity of committed resources, and profitability. Such a knowledge base would provide benchmarks or points of reference that describe current configurations including financial, human resource, facility, and management dimensions how they relate to performance measures such as productivity, efficiency, and profitability. A knowledge base specific to direct-to-consumer marketing will provide points of reference as these enterprises continue to gain prominence in the rural and regional agricultural economic landscape.

A benchmark survey was implemented across a sample of direct market managers in Delaware, Maryland, New Jersey, New York, and Pennsylvania. The survey sample was drawn from a list of at least 3,700 managers including their hard mail addresses, phone numbers, and email addresses. A report of survey results will be prepared and delivered summarizing the variation in the responses. The survey results will be presented for sub groupings of respondents according to a series of benchmark variables. Benchmark summaries can be drawn from the mid Atlantic sample as a whole, any combination of separate states, or an individual state depending on the purpose of the inquiry. These results will allow readers of the report to compare their enterprise’s configuration and performance against those enterprises in different benchmark groups.

Project Objectives:

Retail farm marketers will be better able to gauge key components of a business using this data. Those exploring establishment of a new enterprise can find common features of current businesses. Those assessing the efficiency of a current retail farm marketing enterprise can use this data also. Those seeking to expand a business will be able to gauge the common features of others.

Cooperators

Click linked name(s) to expand
  • Jeff Hyde

Research

Materials and methods:

The project followed a two stage approach with deliverables at each stage. In the first stage, a draft baseline survey was developed through discussion with the board of the Pennsylvania Retail Farm Market Association (PaFarm). PaFarm directors are managers of a diverse set of direct-to-consumer farm marketing enterprises. This survey focused on collection of baseline data in the following categories: location, physical facilities, product line, operation and marketing practices, basic economic data to describe cash flow and resource use. A prototype report was delivered reflecting the survey design as well as the necessary sample size and variation to support useful interpretation of results from implementation of the survey.

In the second stage, the survey wasimplemented across a sample of direct market managers in Delaware, Maryland, New Jersey, New York, and Pennsylvania. The survey sample drew from a list of at least 3,700 managers including their hard mail addresses, phone numbers, and email addresses. A report of survey results will be prepared and delivered summarizing the variation in the responses. The survey results will be presented for sub groupings of respondents according to a series of benchmark variables. Benchmark summaries can be drawn from the mid Atlantic sample as a whole, any combination of separate states, or an individual state depending on the purpose of the inquiry. These results will allow readers of the report to compare their enterprise’s configuration and performance against those enterprises in different benchmark groups.

Research results and discussion:

Benchmarking is a common business management method employed when owners and managers are interested in exploring not only current business features but also how a business changes over time. A business may also be compared with others in the same industry as a means to gauge how it is reflected in the features of similar enterprises. Benchmarking is one tool available when we are considering the effectiveness of current business practices and facilities as well as if a business transition or expansion is being contemplated.

Few facts were known about the state of retail farm marketing before this study. In order to assist those in the direct-to-consumer farm marketing sector a survey was undertaken late summer 2007 through early spring 2008. The target universe was any farm producer that sold their products directly to an end using consumer. Commodity-type marketers were excluded. The initial study was funded through a Northeast Center for Risk Management Education grant. Shortly after this funding was assured, additional dollars were secured from the Northeast Sustainable Agriculture and Research and Education program to expand the initial work from the study of Pennsylvania markets to also include markets in the states of Delaware, Maryland, New Jersey and New York.

In excess of 5,000 seven page, seventy-five question surveys were distributed through a Penn State ag marketing web site promotion, the Pennsylvania Association for Sustainable Agriculture annual meeting, the Mid Atlantic Fruit and Vegetable annual convention, the Mid Atlantic Direct Marketing Conference, the New York Direct Farm Marketers conference, notices on several target audience listserves, inclusion in three major trade press publications and collaboration with key Extension Educators in the target states. The volunteer board of directors of the Pennsylvania Retail Farm Market Association not only served to critique the draft and final survey tool they were instrumental in promoting the project with peers. Poster displays, press articles and formal group meeting presentations in addition to direct mailing were the primary methods used to increase awareness of this project and solicit interested participants.

By April 2008, 256 completed surveys had been received back either through the postal service, fax transmission, emails or in person. Retail farm marketers from Connecticut, Delaware, Maryland, New Jersey, New York, North Carolina, Pennsylvania, West Virginia and Canada are represented by the data collected. The majority (78%) of returned surveys originated from markets in either Maryland or Pennsylvania.

72% of the marketers utilize permanent on-farm structures as their primary outlet with 19% using a temporary structure at a farmers’ market, and 9% using CSA marketing. 56% of the responding retailers utilize more than one market structure type. The average size of the retail sales area is roughly 625 square feet. Average parking lot allocation has spaces for sixteen vehicles. These farm retailers had been in business for an average 22 years.

Few markets had raw product processing capacity. Slightly more than one third had sorting, grading and packing facilities. Nearly all market types had access to separate storage areas and 47% had cold storage ability included in their retail market structures. When identifying the equipment common to the sales check-out area our respondents indicate a ready acceptance of cash registers, certified scales, refrigerated display cases and electronic payment machines. 22% of the retailers use computerized cash registers. Not all markets have access to telephones, facsimile machines or adding machines.

Full-time workers employed by these businesses ranged from zero through 85 with an average slightly over three. Part-time employees ranged from zero through 200 with an average of twelve. Road signs, newspaper ads and brochures were the dominant methods of business promotions. 62% of the markets have a web presence. 18% of these markets are open year round with 74% open by May. 9% of the markets are only open the months of October, November and December. 69% are closed at the end of October. 78% of the markets have operating hours on Sunday.

87% of the reporting markets consider fruits and vegetables their most economically significant retail products with 37% considering a bakery or baked goods as the product they are most likely to add to the mix in the coming year. A pick-your-own enterprise, prepared foods or educational offerings are included in 72% of the marketers retailing efforts in 2007-2008.

Research conclusions:

Sixty-four of the respondents provided their name, address and telephone number in response to the final survey question asking for this information if the respondent was interested in being part of a more detailed follow-up survey building on what was discovered through this project. This data continues to be mined for additional insight.

Participation Summary

Education & Outreach Activities and Participation Summary

Participation Summary:

Education/outreach description:

The pdf of the PowerPoint presentation is attached below.

Project Outcomes

Assessment of Project Approach and Areas of Further Study:

Areas needing additional study

With the data so far it is clear that additional more detailed study would benefit those interested in the retail farm marketing sector. Financial data is one aspect of need for further study.

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.