Enterprise benchmarks for direct-to-consumer farm marketers

View the project final report

Commodities

Practices

• Education and Training: decision support system, farmer to farmer, focus group, networking, participatory research
• Farm Business Management: whole farm planning, budgets/cost and returns, marketing management, feasibility study, agritourism
• Production Systems: holistic management
• Sustainable Communities: infrastructure analysis, new business opportunities, sustainability measures

Skills used for marketing of the Mid Atlantic’s abundant agricultural production continue to increase in economic importance. Producers marketing directly to consumers are capturing a larger percent of consumer disposable income. (The importance of these farm businesses is illustrated in USDA Census data that indicates the Commonwealth is ranked number three nationally for “dollar value of Agricultural Products sold directly to consumers”.) Typically, the margin for agricultural products marketed directly to consumers is twice the margin of bulk or wholesale-marketed products. This follows from the direct linkage to consumers that farm markets provide. Not only does this expand the margin, but it also takes the farm products out of commodity markets and into retail markets that allow for product differentiation. This differentiation provides opportunities for better prices as well as for more stable prices than might be accessible in commodity markets. As the pressures from increased land competition, labor demand, consumer expectations and farm family requirements continue to escalate, the opportunities available from using a more fully developed marketing channel offer increasing possibilities. These possibilities will serve to enhance the viability of Mid Atlantic Agriculture by expanding the scope of farm enterprises, and to directly link farm products to consumer retail markets. 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.

The project will follow a two stage approach with deliverables at each stage. In the first stage, a draft baseline survey will be 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 will focus 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. In addition, the survey will query managers to present key drivers of economic performance and issues they face or perceive as on the horizon that do or will affect economic performance. A prototype report will be 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 will be implemented across a sample of direct market managers in Delaware, Maryland, New Jersey, New York, and Pennsylvania. The survey sample will be 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.