Forwarding this newsletter that may be of interest to you! -Patricia
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"The Overstory" <overstory at agroforestry.net>
02/04/2008 07:01 PM
Publication date: February 4, 2008
The Overstory #202--Direct Marketing of Agroforestry Products
By Stefanie Aschmann
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The Overstory #202--Direct Marketing of Agroforestry Products
By Stefanie Aschmann
Contents:
: INTRODUCTION
: FARMERS' MARKETS
: COMMUNITY SUPPORTED AGRICULTURE
: INTERNET MARKETING
: ON-FARM SALES
: PICK-YOUR-OWN
: AGRI-ENTERTAINMENT
: OTHER FORMS OF DIRECT MARKETING
: DIRECT MARKETING ASSOCIATIONS
: ORIGINAL SOURCE
: ABOUT THE AUTHOR
: WEB LINKS
: RELATED EDITIONS OF THE OVERSTORY
: PUBLISHER NOTES
: SUBSCRIPTIONS
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INTRODUCTION
Agroforestry can enhance cash flow on many farms through the production
of high-value forest products. The greatest challenge, however, is often
marketing rather than production. Unlike commodity crops that have a
readily available, but relatively uncompromising, market; the market for
some agroforestry products is not always apparent. Landowners may need
to take an active role in marketing to reap the benefits of their
production. Producer goals, resources, and products, as well as local
customer needs and habits usually dictate marketing strategies. This
Note describes several different direct marketing strategies that might
be used to market agroforestry products. Many variations on these
options exist--the only limitation is one's creativity.
Direct marketing is based on selling a product directly to the consumer.
It involves the elimination of one or more middle steps in the marketing
process. As a result, the producer receives a significant percentage of
the retail price. At the same time, responsibility for selling farm
products is shifted from the retailer to the producer, making direct
marketing more risky but potentially more rewarding than wholesale
marketing.
FARMERS' MARKETS
For low volume, high-value forest products, farmer's markets may be a
good choice. The term, "farmers' market" is used to describe a market
where farmers sell directly to the consumer, but this marketing system
could also be called a "community market" because of the benefits it
provides directly to the community. Farmers' markets effectively connect
local producers of highvalue products to discriminating and loyal
consumers. Sponsorship of farmers' markets may come from communities,
state or local community service agencies, extension or education
programs, and private citizens.
COMMUNITY SUPPORTED AGRICULTURE
Community Supported Agriculture (CSA) is a "growing and purchasing"
partnership between producers and members of the local community. This
system works best for farms that produce a variety of vegetables, but it
can function for farms that include agroforestry products as well. The
producer grows food for a group of shareholders (subscribers) who pledge
to buy a portion of the farm's crop that season. The exact agreement
between the farmer and the shareholder varies.
A share is usually targeted at providing a family with a weekly supply
of vegetables and fruits and sometimes animal products for the duration
of the growing season. Agroforestry productssuch as fruits and nuts,
woody florals, herbs and medicinal plants may also be part of this mix.
The shares are paid to the farmer either before the growing season or in
installments during the season. The CSA approach secures consumers who,
in turn, share with the producer the risks and benefits of good and bad
years. CSA members are typically families but may also include
restaurants, farmers' markets, or institutions. CSAs provide the
consumer a fresh, high quality supply of produce, knowledge that they
are supporting a local farm, and a "connection" with their food source.
There are currently about 1,000 CSAs in the United States and Canada.
Most are organized and operated by individual farmers, but some are
directed by consumers. Increasingly, CSAs may include more than one
agricultural producer. All build stronger farmer and consumer
relationships.
INTERNET MARKETING
The Internet has revolutionized how people communicate, shop, and market
their products. Many farms have started their own web sites in order to
distribute information about their farm, transact sales, or both.
Opening a "digital storefront" allows you to market to the entire world.
Internet marketing is particularly effective for producers in remote
locations who cannot easily access traditional urban markets. Web sites
can be "hosted" by local internet providers for approximately $6.00 to
$60.00 per month depending on the amount of web traffic anticipated.
Alternatively, some providers may host selected web sites for free in
return for advertising privileges on a site. Professional graphic design
consultants are widely available to help with design, installation and
maintenance of web sites if needed.
It is important to consider objectives before setting up the web site.
Web site objectives will determine the level of maintenance and
complexity of the site. Web sites whose objective is to sell seasonal
products or keep customers informed about the farming operations,
seasonal prices of goods, or when certain crops will be ripe, must have
effective security and be frequently maintained and updated.
An internet site must compete with hundreds of similar sites. Here are a
few strategies for obtaining and increasing web site traffic:
1. Select a domain name that is easy to spell, meaningful, professional,
and sends a marketing message.
2. Register your site with a search engine.
3. Provide links to other sites of interest to potential customers.
4. Make your web site personalized and interactive.
5. Leave your web site address everywhere - on business cards, labels,
brochures, and newsletters.
6. Keep the web site updated and fresh.
7. Provide contact information for customers who wish to phone or fax in
orders.
If you don't want to maintain a web site you may prefer to communicate
with customers via e-mail rather than a web site. Commercial internet
directories such as www.localharvest.org can provide customers with
access to farm e-mail addresses. Producer associations and State
Departments of Agriculture may also provide directories. Developing an
e-mail mailing list of your own, sending out e-mail newsletters, and
leaving your e-mail address in community directories are other ways of
getting the word out about a farm.
ON-FARM SALES
The on-farm store or roadside stand is a common and traditional means of
marketing farm products. Like other means of direct marketing, on-farm
stores provide commodities from the producer directly to the consumer,
eliminating "middle" costs.
The costs for establishing an on-farm store or roadside stand can range
from virtually nothing to very expensive for an elaborate store.
However, the success of on-farm sales depends on location, consumer
preferences, and labor. Costs can mount quickly if someone must be on
duty at all times. Profits will suffer if the location is too far from a
good customer base. Local regulations, laws and rules vary by location,
so it is important to contact local and county authorities before
establishing a roadside or on-farm stand.
One strategy that has been successful for some on-farm marketers is
"enterprise blending." A farm that sells both fruit and crafts, for
example, may sell more of each than if only one of these items is
available. This purchasing phenomenon happens because each enterprise
attracts a different type of buyer, but the buyer often 'discovers' an
interest in the other enterprise after arriving at the farm. One farmer
who sells both sweet corn and peaches says that the people who come to
the farm for the sweet corn often leave with a box of peaches, too.
Start out selling those items that you are good at producing, and
offering a few additional high quality items. Ask customers what other
products they would be interested in purchasing. Build the product
selection based on customer suggestions.
Atmosphere is especially important to on-farm sales. Keeping a store or
stand neat and attractive will go a long way toward gaining sales.
Ultimately, it is the "personal touch" that is important in creating
this atmosphere. Simple things like a friendly greeting, providing
useful information, visiting with customers, and maintaining regular
hours encourages repeat business.
PICK-YOUR-OWN
Pick-your-own or "U-pick" operations offer several advantages. First,
running a pick-your-own operation reduces labor costs involved with
harvesting, washing, and grading. Customers pay lower prices and
experience being out in the field, harvesting the crop and enjoying the
country atmosphere. Crops that are easy to recognize as ripe, such as
berries, fruits, and some nuts are popular U-pick crops. These
enterprises often work well when combined with farm tours.
Before deciding on a U-pick operation, carefully consider all that is
involved with opening the farm to the public. Some of the typical
requirements are: 1) parking spaces, 2) liability insurance, and 3) a
willingness to deal with the public. Another risk associated with these
enterprises is spoilage, particularly, but not exclusively, if bad
weather keeps customers away during critical times.
AGRI-ENTERTAINMENT
Agri-entertainment is another dimension that can be added to
pick-your-own or other on-farm marketing strategies. This is simply
another means of attracting additional customers to the farm.
Agri-entertainment can involve a broad spectrum of activities, including
festivals, special events, hayrides, contests, mazes, cooking classes,
agri-educational tours, or recreational hunting, fishing or hiking.
Agri-entertainment may attract a different set of customers than would
otherwise visit the farm. If carefully planned and advertised, it may be
an effective means of increasing the customer base.
Agri-entertainment can be time consuming and may involve liability and
other legal issues. Agri-entertainment can be started simply, by
providing a shaded picnic area for visitors to the farm for example. Use
the rural setting as an advantage.
OTHER FORMS OF DIRECT MARKETING
Other direct marketing strategies include mail order marketing, delivery
service and rent-a-row or tree. Mail order businesses allow the farmer
to charge premium prices for a product without having to face the public
directly. This may be very important to those who prefer privacy.
Products sold must be storable, ship well, and be relatively
light-weight. Seed sales often make very effective mail order
businesses. In mail order businesses, organization, promptness, and
detailed record keeping are critical to success. Another critical
component of mail order marketing is the mailing list. Developing an
effective mailing list can take several years. Lists developed by others
are usually not effective, as the customers you want to target need to
be customers interested in your product(s).
Producers or groups of farmers who run delivery services can command
high prices for their products. However, locating and retaining
customers for delivery services can be extremely time-consuming, and
transportation costs can rapidly add up. Another issue is reliability.
Customers will remain loyal only if they receive what they are promised
when it is promised. Still, if time and resources are available to
implement this strategy, the personal and financial rewards can be
great.
Another direct marketing strategy that may work on some farms located
near urban centers is the "rent a row, tree, or animal" strategy. Here
the customer pays to rent a plot of land, a tree, or an animal such as a
milk cow at the beginning of the growing season. The producer provides
labor and inputs needed to grow the crop or produce the animal product.
Then the customer receives and sometimes harvests the crop or animal
product at the end of the year. This marketing strategy could be
considered a variation on the U-pick strategy, but for the producer it
eliminates much of the risk involved with U-pick, as payment is
up-front. One of the difficulties with this strategy is the need to keep
track of the management practices implemented on each item rented.
Another problem may be keeping track of the renters, some of whom may
wish to visit their rental regularly. Scheduling public access to the
farm must be included in the up-front planning.
There are advantages and disadvantages to any marketing strategy.
Whether or not a direct marketing strategy is suitable for a particular
situation will depend on the size of the farm, the variety of crops
grown, available labor, and producer goals and personality. Many farms
use more than one marketing strategy simultaneously, and others use
different strategies at different times.
DIRECT MARKETING ASSOCIATIONS
Producers considering direct marketing strategies may want to become
involved with one or more direct marketing associations which have been
established throughout the United States to provide networking
opportunities and marketing information to their members. Services
provided by these associations may include:
* member and consumer directories
* conferences
* workshops
* tours
* newsletters
* certification
* insurance
* government relations
One of the largest direct marketing association in the United States is
the North American Farm Direct Marketing Association (NAFDMA),
established to promote and foster "the growth of farm direct marketing
by offering opportunities for education, networking and fellowship to
its members."
::::::::::::::
ORIGINAL SOURCE
This article was excerpted with the kind permission of the publisher from:
Aschmann, S. 2003. Direct Marketing of Agroforestry Products.
Agroforestry Note 27. USDA National Agroforestry Center (NAC), Lincoln,
Nebraska. <http://www.unl.edu/nac>.
::::::::::::::
ABOUT THE AUTHOR
At the time of writing, Stefanie Aschmann was Agroecologist at the USDA
Natural Resources Conservation Service, USDA National Agroforestry
Center, Lincoln, Nebraska. She is currently leader of the Energy
Technology Development Team at the West National Technology Support
Center in Portland, Oregon.
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WEB LINKS
North American Farmers' Direct Marketing Association is a trade
association dedicated to nurturing the farm direct marketing industry
and encourages formation of regional and local associations:
<http://www.nafdma.com>
The USDA Natural Resources Conservation Service Alternative Enterprises
and Agritourism:
<http://www.nrcs.usda.gov/technical/RESS/altenterprise/>
Appropriate Technology Transfer For Rural Areas has many publications on
direct marketing and value-added production: http://www.attra.org
including their Marketing page: <http://www.attra.org/marketing.html>
The USDA Sustainable Agriculture Research and Education presents
information for farmers, researchers, and consumers:
<http://www.sare.org>
The University of Arizona Dept. of Agricultural & Resource Economics
Direct Farm Marketing and Tourism Handbook:
<http://cals.arizona.edu/arec/pubs/dmkt/dmkt.html>
Penn State College of Agricultural Sciences How to Direct Market Farm
Products on the Internet:
<http://agmarketing.extension.psu.edu/Retail/howdrctmrktoninternet.html>
USDA Agricultural Marketing Service:
<http://www.ams.usda.gov/farmersmarkets/>
Washington State University Cooperative Extension has information on
value-added and marketing: <http://agsyst.wsu.edu/>
Non-wood News is an information-rich newsletter produced by FAO's
Wood and Non-wood Products Utilization Branch, providing readers
with current information on nontimber forest products and their
contribution to the sustainable development of the world's forest
resources: <http://www.fao.org/forestry/site/nwfp/en/>
::::::::::::::
RELATED EDITIONS OF THE OVERSTORY
The Overstory #162--Agroforestry Tree Products (AFTPs): Markets
The Overstory #148--Markets for farm forestry products and services
The Overstory #136--Underutilised Indigenous Fruit Trees
The Overstory #135--Medicinal and Aromatic Plants in Agroforestry
The Overstory #83--Niche Markets:
<http://www.agroforestry.net/overstory/overstory83.html>
The Overstory #67--Optimising Commercial Timber Potential
for Farm Forestry:
<http://www.agroforestry.net/overstory/overstory67.html>
The Overstory #63--Value-Added Enterprises for Small-Scale Farmers:
<http://www.agroforestry.net/overstory/overstory63.html>
The Overstory #62--The Seven Secrets of Successful Selling:
<http://www.agroforestry.net/overstory/overstory62.html>
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PUBLISHER NOTES
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Editor: Craig R. Elevitch
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