Marketing Sustainable and/or Organic Products in Small Metro Areas

Project Overview

LNC98-126
Project Type: Research and Education
Funds awarded in 1998: $41,355.00
Projected End Date: 12/31/2001
Matching Non-Federal Funds: $14,235.00
Region: North Central
State: North Dakota
Project Coordinator:
David Watt
Dept of Agricultural Economics, North Dakota State University

Annual Reports

Commodities

  • Agronomic: potatoes
  • Fruits: melons, berries (other), berries (strawberries)
  • Vegetables: asparagus, beans, beets, broccoli, cabbages, carrots, cauliflower, celery, cucurbits, eggplant, garlic, greens (leafy), onions, peas (culinary), peppers, rutabagas, sweet corn, tomatoes, brussel sprouts
  • Additional Plants: herbs
  • Animals: bovine, poultry, swine

Practices

  • Education and Training: demonstration, networking
  • Farm Business Management: community-supported agriculture, cooperatives, marketing management, market study
  • Sustainable Communities: social networks

    Abstract:

    [Note to online version: The report for this project includes a large Appendix that could not be included here. The regional SARE office will mail a hard copy of the entire report at your request. Just contact North Central SARE at (402) 472-7081 or ncrsare@unl.edu.]

    The goal of this project was to increase sales of locally grown organic foods in Fargo, North Dakota and its neighbor, Moorhead, Minnesota. The community population is approximately 125,000. Like many other small metro areas in the Midwest, Fargo-Moorhead had no established mainstream market for organic foods despite the growth of organic foods nationally. Consequently, producers sought to reach the growing segment of mainstream consumers who desired high quality, earth friendly foods, but who don’t have the time to search around town for particular products. Project coordinators knew that selling to a wider range of consumers meant developing a reliable supply of organics to local markets.

    Successfully mainstreaming organics meant working closely with retailers as well as consumers. Project leader, Ben Larson, a researcher at North Dakota State University as well as local organic farmer, contacted the Organic Alliance in St. Paul to develop a marketing, consumer education, and media plan. That marketing strategy was then presented to the managers of three local grocery store chains. An agreement was reached with two of those chains to sell certified organic products. Contacts with the media resulted in numerous newspaper and television stories about the project (see appendix).

    A local consumer survey indicated strong interest in organic foods, especially in locally grown foods (Braun, 1999). To simplify the grocery stores’ ordering procedures, coordination was established between local growers and grocers. One sales call was made each week to the grocery stores, offering them a wider selection of produce and reducing the number of calls that may otherwise have interrupted their work day. To promote the produce, each store was provided with attractive point of sale materials from the Organic Alliance in St. Paul.

    Project leaders also developed a new farmers market devoted to local noncertified organic foods. Advertising was purchased on public radio and in newspapers to promote the availability of the organic foods, both at the grocery stores and at the farmers market.

    A sub-contract with the Northern Plains Sustainable Agriculture Society (NPSAS) resulted in the coordination of rural farmers interested in marketing their produce in Fargo-Moorhead.

    The result was an increase in sales of organic products at grocery stores and at the new farmers market. Sales to grocery stores started well. In the winter of 1998 1999, one grower’s packaged, certified organic potatoes sold much better than retailers expected, encouraging them to try more products. However, sales of other products were hit and miss. Muskmelons and watermelons sold well despite competition from lowpriced conventional melons. However, a locally grown, organic sweet corn proved too expensive compared to machine harvested corn, about four times less costly than the organic. Packaging and labeling of products (tomatoes, cucumbers, etc.) was difficult. The industry standard, PLU (Price Look- Up) number stickers project leaders had hoped to purchase, were only available in large lots (500,000 or more). Future research may find a solution by a number of grower groups around the country purchasing the labels together, perhaps a purchasing co-op to allow them to buy in bulk.

    In addition to labeling, a lack of certified growers limited the project’s retail sales. The grocery stores wanted more certified produce than the organic farmers could supply. However, because of this project, five growers may seek organic certification and most of the grocer partners remain convinced of the consumer’s interest in organic products. They now stock organic items from national wholesalers.

    While the certified organic farmers sold through the grocery stores, the noncertified farmers decided to initiate a farmers market. The market proved quite popular at its prime location on a busy street in an upscale neighborhood in south Fargo. Consumers said they liked the market’s convenient location and after work hours as well as its focus on organic foods. There was no rental fee for the farmers because the church that provided the parking lot site said it might attract new parishioners by providing the service, as well as helping local farmers, thus no fee.

    Despite the success of the farmers market, it did not re-open the following year. The project leader grew weary of the hours and accepted another job, consequently down-scaling his own operation, and without his leadership the group apparently disbanded. Only one farmer wanted to continue, but did not. The group’s champion speculated that lack of motivation, consistency, and poor salesmanship skills may have hampered the growers’ progress.

    Introduction:

    Substantial progress was made to establish a market for organic and non-certified organic produce in the Fargo, ND and Moorhead, MN area. Partnerships were established early on with two local grocery store chains, in part, due to professionally produced sales material from an already established organic marketing group. Local farmers improved sales through direct methods — a farmers market and farm stands — as well as through retailers — two local grocery store chains.

    Initial retail sales of certified organic products at grocery stores was promising, and served to demonstrate to produce managers that demands for organics does exist in Fargo Moorhead. Labeling and packaging local organic products proved difficult because only bulk quantities of bar codes are available. Three to four grocery stores are now carrying organic produce on a regular basis, consequently, the project leader believes he accomplished the group’s goal to develop a mainstream market for organic produce.

    Producers learned many new skills through this project. They attended conferences and farm tours that gave them the knowledge to solve problems in their own operations, as well as share skills and information they discovered. Market power through joint sales proved significant, but the failure to sustain that alliance is a disappointment. The grocers and the public appreciated the organic product, but ironically, the producer supplier proved to be the main factor that was unsustainable.

    Project objectives:

    1. 1. Increase memberships in community supported farms (CSAs*).

      2. Increase sales at roadside stands and farmers markets.

      3. Increase sales of certified organic products at retail outlets.

      4. Develop producers’ growing and marketing skills.

      5. Form marketing alliances between rural and local producers.

      6. Document the economic impact of local marketing.

      * Community supported agriculture (CSA) offers a direct growing and purchasing relationship between the farmer and consumer. There are four types of CSAs: subscription or farmer-driven, shareholder or consumer-driven, farmer cooperative, or farmer-consumer cooperative (2000, Appropriate Technology Transfer for Rural Areas).

    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.