Hey there, thanks for joining me again this week.
So it’s marketing week here on the Small Farm Nation podcast. As you know I cover four categories each month, one per week. I do an episode on farm strategy, followed by an episode on branding. Last week’s episode was on online marketing and today is on marketing.
And it’s an important episode, and if you’re a farmer, this is gonna really resonate with you.
I want to talk about why small farms struggle so much to sell their products. If you’re a small, family farmer, you know what I mean.
I gave this issue a lot of thought, both from my own experiences selling farm products as well as from what I hear from so many other farmers.
And when I thought it through, I created this list of ten reasons why small farms struggle to sell their products. Listen in and see what you think.
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Now, in this episode I’m going to just go through the list of ten. I’ll tell you what I think the issues are and why they exist.
Then, in the next Marketing episode, which will be in four weeks, we’ll revisit the list and I’ll share my thoughts on what we, as farmers, can do to, not only overcome those issues, but strategically position our farms for success.
Does that sound good?
Let’s get started.
Okay, so Timmy says there are 10 reasons why small farms struggle. Here they are.
Reason number one is that small farms are inconvenient to buy from. This one is obvious.
Here—let’s look at how most people buy food. They walk or drive a short distance and go into a grocery store that’s open 7 days a week and, in some cases, 24 hours a day. Then their senses are bombarded with an endless array of options. Fresh produce, packaged meats, charcuterie, wine, bread, eggs, milk, vegetables and fruit from all corners of the globe and, of course, rows and rows of processed food.
Let’s say it’s the holiday season. They realize they need more root vegetables…or another turkey. What’s easier? Driving five minutes to Kroger to grab what you need? Or doing a Google search for a farm and trying to find their phone number. When you see they don’t have a number on their farm website (most don’t), they have to fill out a contact form and wait for a response. And wait.
See what I mean? Let’s be honest here…it’s flat out far less convenient to buy from a small farm.
Reason number two is that the farm is almost ALWAYS far removed from a good market. And that’s for a good reason. I mean, there’s not a lot of land to farm in downtown Chicago—or Dallas. So the farm is out in the country. Often, it’s far out in the country. In my case we were two hours and 15 minutes (without traffic) to Atlanta.
So farmers often struggle because they’re far away from a good size market—one with a population of at least 50,000, and that’s bare minimum. So they try to sell locally in, usually, economically depressed areas, to the people who are MOST likely to want and need the cheapest chicken from Wal-Mart.
So distance to good markets is reason number two.
Reason number three is that small farms sell inconvenient products. What do I mean by this?
We used to sell all kinds of meat products. But we sold many of them whole. As in a whole chicken? Now, dealing with a whole chicken is nothing for me, and probably not for you. In fact, I’d much rather have a whole chicken so I can make stock and what not.
But I had many consumers ask me what to do with a whole chicken! That’s because they’re used to buying from a grocery store where all the bones have been removed from meat! Go see for yourself…there are almost no bones in a grocery store!
So consumers often don’t know how to cut up a whole chicken. And they certainly don’t have the room to store half a cow or pig, much less understand a “cut sheet” and how to request the meat costs they want.
But another reason small farm products are inconvenient is that we live in, increasingly, a “prepared food” society. You know—these are the “meal-kits” made popular by such firms as Blue Apron.
Now, I believe Blue Apron has a questionable business model itself, but that doesn’t mean there won’t be growing demand for prepared meals. Heck, even Chick-Fil-A has entered the prepared meals business, featuring recipes and pre-measured ingredients for five chicken entrees—Chicken Parmesan, Chicken Enchiladas, Dijon Chicken, Pan Roasted Chicken and Chicken Flatbread. These kits sell for $15.89, and can be ordered using the Chick-fil-A One app and/or picked up at the restaurant.
And it was only a matter of time, right, but even Amazon entered the prepared-meal game. In late 2017, amazonfresh.com and allrecipes.com announced a partnership that will allow for meal preparation delivery.
Now, the Amazon/All Recipes approach isn’t exactly the same as Blue Apron, but the point is that two things are happening. 1) there is no decline in the consumer’s demand for convenience, and 2) businesses (and venture capital) are aggressively investing to meet that demand.
So, to recap, reason number three is that small farms typically sell inconvenient products, and consumers increasingly want more convenience.
Reason number four is that small farms sell unfamiliar products. Remember, consumers are used to walking the aisles of the modern grocery store. While it appears there is lots of variety there, there isn’t as much as you’d think.
The reason it appears there is variety is because all grocery stores have global inventory. They only carry a couple of fruits you couldn’t possibly grow locally. But you can get mangoes, pomegranates, grapes, bananas and even oranges in January, wherever you are.
And you won’t find any of those things in your local CSA box. Your CSA box may have carrots in the cool season, but even that may be a problem for consumers. That’s because in grocery stores, carrots are orange, and only orange. And most people know—maybe—two types of lettuce. Iceberg and Romaine, perhaps.
And if people want Brussel sprouts, they usually grab them in a frozen food box. They rarely know what vegetables look like out of the ground or how to prepare them.
Supermarket apples are unblemished, and carrots are straight as an arrow. Now, compare that to typical CSA products, where far sweeter and more nutritious carrots may in fact be crooked. Ditto with local apples that were so healthy a worm didn’t mind taking a bite.
Of course, the fact that small farmers grow so many heirloom varieties can be a benefit, but it’s also confusing to many consumers. So much so that farmers create recipes and instructions on what to do with the CSA box contents.
So, reason number four is that small farms sell unfamiliar products.
Reason number five is that small farms are flat out more expensive than most supermarket alternatives. Now, I said most here, because a small farm can definitely beat premium retailers, such as Whole Foods, on price.
I used to make about 30,000 pounds of artisan cheese a year. We sold it to a distributor which then sold it to Whole Foods, Kroger, Disney and the like. When I’d go into Kroger I’d see our cheese at $28/lb. Definitely a lot more than I got paid for it. So, could I have made great profit selling directly to consumers for less than that—say, $25/lb, or even $20/lb?
And the same applies to the vegetables, fruits, meats, soaps and everything else in those type of stores.
But—those high prices they charge, at least in the case of meats, is partly because of the convenience. I mean, they’re not selling a whole cow. They’re selling a filet mignon. Or a chicken breast.
And, they have a physical store close to the consumer. So that warrants a high price for premium supermarkets like Whole Foods.
But Whole Foods, even at $16 billion in annual sales, is tiny. I mean, total supermarket sales is about $700 billion in annual sales. So the overwhelming majority of Americans shop at conventional supermarkets and, increasingly, at supercenters like Wal-Mart, Costco and Sam’s Club.
There’s no way small farms can compete on price against the average supermarket or Costco. So, since the majority of Americans shop there, it’s clear that small farms are a more expensive alternative.
Now, before you start yelling at the speaker that it’s an unfair playing field because big Ag gets grants and subsidies, let me say I hear you. I get that. And I almost added that as reason #11 small farms struggle. But really, it’s not a separate reason. It belongs here under prices, because the fact is that it makes prices seem cheaper for consumers. And that’s my point with reason number five—that small farms are flat out a more expensive alternative.
Reason number six that small farms struggle to sell products is because they’re not unique as perceived by the consumer. This is related to what I said earlier—a carrot is a carrot, a chicken is a chicken and so on.
Small farms spend a lot of marketing energy talking about why pastured poultry is better than industrial chicken. Why raw milk is more nutritious than ultra-pasteurized milk. Why an organic carrot grown in fertile, local soil is more nutritionally dense than a supermarket carrot grown in sandy Florida soils. Why an orangish free-range egg yolk is so much more delicious and healthy than a cheap supermarket egg.
We all go to great lengths to educate consumers for a good reason. Most of them can’t tell the difference. A chicken looks like a chicken. A nutritionally dense carrot looks, on the outside, like a carrot devoid of nutrients.
So, while we know our products are unique and have nutritional benefits, most consumers are unaware of this. That’s reason number six.
Reason number seven that small farms struggle is that most people don’t even know they exist. Even the most famous farmer, if there is such a thing, is unknown to almost everyone. You may know Joel Salatin and Polyface, but I can promise you that the vast majority of residents of the Shenandoah Valley shop at typical grocery stores. They don’t even know of his farm.
It’s easy to see why. I mean, small farms like yours and mine don’t have money to spend on television or radio commercials, We don’t advertise on billboards, we don’t have retail store fronts, with signage, and we don’t sponsor events to “get our name out there.”
So, it’s true. Most people don’t even know that your small farm exists. But as I’ll explain next time we explore this subject, that’s a big opportunity for you.
Reason number eight that small farms struggle is that they have inconsistent production. What I mean is that they either grow seasonally, as in the case of fruits and vegetables. Or they produce a finished grassfed cow “every now and then.”
Obviously this makes it difficult to sell to those who need a steady, dependable supply. Buyers like restaurants and resorts, for instance.
So as much as many small farmers want to sell to restaurants, and chefs would like to support them, the fact is the farm’s production is not aligned with the restaurant’s needs. So it’s a force fit, at best.
Part of the reason for that relates to—
Reason number nine that small farms struggle, which is processing bottlenecks. Industrial meat producers have at their disposal huge processing plants that are increasingly automated. They can process thousands of animals a day, dispatch the bones and wrap everything in clear, plastic packages.
By comparison, a typical small meat farm has trouble finding a local processor for their grassfed beef or pork. Most of the time they’re forced to drive many hours each way for processing. Even then, they have to make their appointments months in advance. So imagine how challenging that is—forecasting when your cows will “finish” on grass and scheduling the processing date to match that.
Pastured poultry farmers can’t even find someone to process their chickens. Often no matter how far they’re willing to drive. There are just not many processing plants that process small batches of birds.
If the farmer does find a poultry processor they’re usually forced to drive long distances each way. Imagine how much extra cost this adds to the price of a chicken since the farmer can’t exactly “make it up on volume.” So this contributes to the huge pricing problem small farms face.
Of course, many farms would be happy to process on farm themselves. But various laws and regulatory bodies block this. Which leads me to my final point.
Reason number ten that small farms struggle to sell products is intense regulation hurdles.
What do I mean? Here’s a simple example. My farm was located five miles from a state line—on the South Carolina / Georgia border. I was in Georgia but much closer to Greensville or Columbia, South Carolina than I was to Atlanta.
But could I sell my raw milk or pastured poultry in South Carolina? No. Even though I was only a half hour from a good South Carolina market, I couldn’t sell there. But I could drive 6 hours to Valdosta, GA to sell there.
And I’m not alone. It’s common for farmers to live near state lines—often multiple state lines—and not be able to sell their products on the other side.
And, as I said, many farmers would like to process their red meat or poultry on farm. But you can’t do that without investing in becoming an inspected USDA facility. Some farms, such as White Oak Pastures in Georgia and Gunthorp Farms in Indiana have done this. But at a major capital expenditure that most small farms can’t, or won’t, risk taking.
So there you have it. The ten reasons that I see for why small farms struggle to sell their products. As you can see, there’s no fluff here. These are very real reasons why it’s challenging to sell small farm products.
But where there is challenge there is opportunity. Ask any entrepreneur. And in the next marketing episode, I’ll guide you through what you can do to overcome these hurdles and position your farm for sustainable success.
Thanks for Listening!
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