Building Diverse Markets and Strong Businesses with Limited-Means Farmers

Project Overview

LNC01-189
Project Type: Research and Education
Funds awarded in 2001: $50,636.00
Projected End Date: 12/31/2002
Matching Federal Funds: $15,000.00
Matching Non-Federal Funds: $55,962.00
Region: North Central
State: Ohio
Project Coordinator:
Colin Donohue
Rural Action

Commodities

  • Fruits: apples, berries (other), peaches, pears, plums, berries (strawberries)
  • Vegetables: asparagus, beans, beets, broccoli, cabbages, carrots, cauliflower, cucurbits, eggplant, garlic, greens (leafy), onions, parsnips, peas (culinary), peppers, sweet corn, tomatoes, brussel sprouts
  • Additional Plants: herbs
  • Animals: bees, bovine, poultry, goats, swine
  • Animal Products: dairy

Practices

  • Animal Production: grazing - rotational
  • Crop Production: agroforestry
  • Education and Training: extension, networking, technical assistance
  • Farm Business Management: whole farm planning, new enterprise development, cooperatives, budgets/cost and returns, marketing management, agricultural finance, value added
  • Sustainable Communities: partnerships, community services, social networks

    Abstract:

    This project pursued a strategy of encouraging diversification, developing new and direct markets, and strengthening business skills in order to enhance the economic viability of limited means producers. Growers have indicated continued interest in activities related to new crops, development of business skills, and selling to Ohio University. The Good Food Direct! marketing project provided benefits, especially to newer producers; growers expressed a strong interest in continuing the project. However, the project structure is highly labor-intensive, and sales volume was far from sufficient to cover operating costs. In addition, efforts to expand Good Food Direct! into nearby urban markets proved largely unsuccessful. A sustained multi-year marketing effort might eventually result in market penetration, but would require a substantial infusion of capital with no guarantee of success. Other opportunities, such as selling to Ohio University, are more compelling. The success of the Good Food Direct! Holiday Catalog, which attracted sales from across Ohio with relatively little effort, indicates that it may warrant more attention than a regular-season catalog.

    Introduction:

    Background and Context for the Project
    Appalachian Ohio is a region with a history of extractive “boom and bust” industries, including coal, oil and clay extraction, leaving widespread poverty. Farms are generally small, averaging 180 acres, and economically precarious. Counties in the region have total annual agricultural production ranging from $2.7 million to $12 million, as contrasted with $70 million to $110 million per county in Ohio’s grain belt.
    These circumstances, combined with increased property taxes and low prices for farm commodities, have led to steep declines in the number of farms in the region. Between 1952 and 1992, Athens, Meigs, Vinton and Hocking Counties all lost more than 50 percent of their farmland, and between 1990 and 1995 each county lost approximately 3,000 acres of farmland. This loss of farms and farmland threatens the social fabric of our communities.
    Farms in the region are mainly small, family-owned operations with unsophisticated marketing strategies and limited business skills. As a result, many are marginal, hovering on the edge of economic disaster. At the same time, there is increased demand in our region and nearby urban areas for high-quality fresh produce, particularly organic produce, and consumers are willing to pay premium prices for quality products. More than 10 million people live within a four-hour drive of Appalachian Ohio; the nearby city of Columbus, with more than a million people, has experienced an economic boom. Recent indications that the time is ripe to capitalize on these trends include:
    § a tremendous response to a front-page article in the Columbus Dispatch about the 2000 Good Food Direct! Holiday Catalog;
    § preliminary surveys and pilot projects in Athens and Columbus showing that restaurants in both cities are interested in purchasing more local produce;
    § continuing sales growth from our Good Food Direct! multi-grower catalog;
    § interest from Ohio University in purchasing local produce for its food service and catering operations.

    Project Design
    Based on these indications and our knowledge of grower interests and needs, we designed a strategy that would harness local and regional market interest and connect farmers with customers willing to pay more for quality local produce. The strategy was built around our innovative Good Food Direct! program.
    Good Food Direct! is a multi-grower catalog of local Southeast Ohio farm products. Customers order on a weekly basis throughout the growing season, and also receive a Holiday Catalog featuring value-added and other gift items. Between 1997 and 2000, sales doubled, with 2000 sales totaling $26,000. It seemed likely that by increasing marketing efforts, reaching into the Columbus market, expanding restaurant sales, and further developing the Holiday Catalog, sales could be doubled again.
    In addition, we planned to link larger producers with food service managers at Ohio University (OU). OU is by far the largest food purchaser in Athens County, serving more than 10,000 meals each day through cafeterias and also generating sales through convenience stores, a Food Court, and a catering business. While OU pays wholesale prices for produce, eliminating the “middleman” can give producers a significant advantage.
    OU’s catering operations also purchase specialty items such as shiitake mushrooms and quail eggs. Foodservice managers have expressed interest in purchasing ten percent or more of their produce from local growers, presenting a major new marketing opportunity.
    In addition to providing marketing assistance, our strategy included training and technical assistance activities to build growers’ capacity to evaluate their operations and bring them into greater profitability. We offered a toolbox that included workshops on farm taxes, specialty crops, and merchandising at farmers markets; training and assistance for development of both Internet and print marketing materials; and information about high value alternative crops and farm products through additional workshops and conferences.

    Project objectives:

    Approach, Activities and Methods
    As a membership-based organization, Rural Action projects are steered by members. Policy for the Good Food Direct! (GFD!) project is set by the producers who participate in the program. Other project decisions are made in consultation with the Sustainable Agriculture Advisory Board, comprised of farmer members and partners, natural resources agency personnel, consumers and interested community members.

    Planned project activities included:
    · development of Web pages for farmers involved in GFD!;
    · establishment of GFD! domain name and on-line credit card sales for participating farms;
    · a catalog, ordering system and marketing effort targeted at GFD! restaurant customers;
    · development of brochures and marketing displays for interested produce growers;
    · business development workshops in cooperation with the Small Business Development Center at Ohio University, including workshops on pricing, marketing, selling, merchandising, taxes and bookkeeping;
    · organizing of workshops on organic and specialty crops with promising markets;
    · negotiations with Ohio University to purchase local produce;
    · support for information sharing and joint action among regional farmers’ markets;
    · networking local farmers with a mid-size value-adding processor through a subcontract with ACEnet.

    Projected Outputs were:
    · participation of 150 in workshops on business skills and alternative crops;
    · ten or more Web pages showcasing local farms on Good Food Direct! Web site;
    · two catalogs with 20 producers for Good Food Direct!;
    · sales of $50,000 for Good Food Direct!;
    · five hundred customers purchasing through Good Food Direct!;
    · technical assistance and food science expertise for a mid-size processor.

    Projected Outcomes were:
    · geographically expanded markets and capture of new customers on the Internet;
    · increased networking, information sharing, and sharing of materials among regional farmers’ markets;
    · increased understanding of and experience with active marketing on the part of farmers;
    · Better business practices and crop selection.

    Actual Results

    Desired Outcome: $50,000 in retail sales for farmers through GFD! and restaurant sales
    Activity/Output: Retail catalog for 20 producers and restaurant catalog with 10; 2 GFD! catalogs and 1 holiday catalog
    Actual Result: 35 producers selling $44,372 through 2 versions of GFD! involving 3 catalogs.

    Desired Outcome: 20 producers marketing products through GFD!
    Activity/Output: Recruitment of new producers
    Actual Result: 35 producers participating for all 3 catalogs

    Desired Outcome: Increase number of GFD! customers by 60 percent to 500
    Activity/Output: Promotions, advertising, tastings, recruiting
    Notes: Expansion into Columbus proved slower that expected
    Actual Result: An increase of 20 percent to 370 customers

    Desired Outcome: 40 farmers have tools to implement business improvement practices
    Activity/Output: Workshops on pricing, business planning, bookkeeping, marketing, merchandising, ag taxes, marketing plans, selling to restaurants, pricing, selling, advertising, merchandising, customer service
    Actual Result: 51 total workshop participation;
    15 farmers experiment with planting new crops; 150 attend new crops workshops; 185 attended conference and workshops on medicinal herbs, fruit crops, etc.; 30 experimented with new crops

    Desired Outcome: 5 farmers sell $10,000 worth of produce to a mid-size produce distributor
    Activity/Output: 10 local farmers are networked with mid-size produce distributors
    Notes: Subcontract to ACEnet
    Actual Result: They focused on value-added instead; increased value-added products from local foods to $15,000

    Desired Outcome: $2000 in sales beyond GFD! from new marketing tools
    Activity/Output: Web pages and brochures developed for 10 farmers; brief web pages with photos on new domain goodfooddirectnet.com for 22 GFD producers, but less interest in brochures.
    Actual Result: Concrete sales outside GFD! difficult to assess; several producers stayed in the catalog for the advertising benefit, not for actual orders

    Desired Outcome: Database of farmers in Athens and surrounding counties derived from an agricultural assessment
    Activity/Output: Survey farmers and landowners to determine existing crops and commodities
    Actual Result: We conducted a customer survey and received 170 replies, and cooperated with OSU Extension on a survey in Washington county (Extension has survey results)

    Desired Outcome: $5,000 in sales to Ohio University by local farmers
    Activity/Output: Meetings with OU and farmers identified in assessment
    Notes: Will develop more as OU and producers gain experience working together
    Actual Result: $5,326 in local food purchased with interest in expanding dramatically

    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.