Impressions on Market Channels, based on interviews: buying practices, requirements, and patterns for all local food channels and for each market channel
The general business skills and practices for local foods marketing are more like having a small business than those farms involved in growing commodities. Second, that an understanding of market channels – direct via farmers market vs wholesale to retail for example – may be important to long-term success. Third, I found that the buyers of local foods seem committed to working with farmers and to building strong and stable relationships that go beyond buying and selling. Fourth, there are some obvious opportunities in season-extension production (greenhouses, high tunnels), value-added processed foods, and other niche areas along with high value summer produce (eg heirloom tomatoes). This is all good news. This project will contribute added details on how the local foods markets work and can be a useful asset in helping farmers and organizations move into new opportunities.
Personal Skills Needed for Local Foods Farmers to Sell to Local Foods Buyers
a. Communication and responsiveness
Written communication is often preferred – easier to keep track of email than phone message; also, written invoices
In-person updates are sufficient for many buyers
Willingness to continually update buyers about crop status and timing (beginning / ending) is a key skill and much needed by buyers.
b. Reliability / dependability
Farmer must deliver product type, quality, and quantity as agreed to
Buyer is planning on this and must be apprised of any changes promptly
(This is true from the smallest restaurant to the largest wholesaler)
c. Courtesy and professionalism – relationship with buyers
Many buyers make a distinction between “professional” farmers versus hobby farmers and gardeners, saying the want to support people who are farming for a living. I read this as intention and investment, not size.
Appreciation of the buyers’ business activity and availability (ask best times to contact, etc)
Follow requirements for products, handling, delivery, boxes, etc
Be nice!
Be persistent at finding the right person and staying in touch
d. Business skills
How to find local buyers (eg. Local Harvest, other directories and lists)
How to research and approach prospective buyers?
How to prepare for first contact and giving information about the farm
Record keeping, invoices, taxes, etc.
Pricing for direct and wholesale buyers
How to manage accounts (eg. primary, secondary) for each crop
Liability insurance; crop insurance for specialty crops
Need for and access to capital for on-farm improvements (organic practices, fencing, etc)
Production and Handling Practices Needed for Local Foods Markets
a. Selection of crops / varieties for the farm: What can I grow well? What crops have market value? How about experimental or niche crops? Getting input from buyers on what is needed...
b. Making production practices more transparent, such as methods of pest control and use of chemicals. Many buyers look for “sustainable” practices and will want to visit the farm.
c. Good food safety practices of post-harvest handling to promote food safety. If not GAP certified, understand the goals of this program and seek those goals
d. Post-harvest handling including prompt cooling from field heat
e. Sorting and grading for consistency needed for buyers, not necessarily USDA grade but get a sense of grading that is needed for each buyer
f. Packaging that makes it easy for the buyer to handle products; this includes appropriate box sizes, amounts per box; amounts per bunch
g. For processed foods, use of a certified commercial kitchen or have a certified kitchen at home; for meat, have it processed in a federal or state inspected slaughterhouse; may need a meat-handlers license to do value-added meat production. Working with extension and other local resources as needed.
Opportunities
a. Certain products: goat cheese; beef and pork; some vegetables such as broccoli, celery (must be hard to grow); regular potatoes and onions; berries, peaches, apples and other fruit – very desirable, specialties desserts; Asparagus is “sold like futures” according to one chef.
b. Shoulder season crops (spring and fall) through the use of structures or production strategies, greenhouse tomatoes and greens are of high interest
c. Value-added, processed foods that can be sold during shoulder season and even in winter, such as jams, jellies
d. Honey is an important crop for some buyers
e. A diverse array of products, types of products, and buyers is the best strategy in the local foods market.
I. Impressions of Market Channel
A. Specialty Distributors and Brokers (local, to households or businesses) 9 total
Bread Riot, Rowan County #5
Downeast Connect, Columbus Co and area #10
Feast Down East, Wilmington #16
Madison Farms, Madison Co #11
Piedmont Local Foods, Rockingham Co #2
Pilot Mountain Pride, Surry Co and NW #21
Produce Box, Wake/Johnson / statewide #12
Sandhills Farm to Table Co-Op, Moore County # 9
Mint Market, Durham # 29
Interest in Local: High; these organizations work with 100% local items
Description: These are businesses, nonprofits, and co-ops who were created specifically to supply local products. Some of these sell primarily or exclusively to households while a few others (Madison Farms and Pilot Mountain Pride) sell primarily to business clients.
Definition of local: Often a relatively small area, often a county or county plus border counties (even if these go into Virginia). Produce Box is the only one which sources state-wide, though they have many near-by sources.
How it works: Specialty distributors – many more accurately brokers – connect farmers with local foods buyers including consumers. These companies establish a brand for local food and then aggregate products of many farmers to sell to households or companies interested in local food and other products. All of the products come directly from farmers, though the two largest organizations, Produce Box and Sandhills Farm2Table purchase from the wholesale distributor Eastern Carolina Organics on occasion; Product Box occasionally buys from Piedmont Local Food.
For several of these, sales are processed online. Farmers submit what they have available, managers coordinate what they are interested in and then buyers are able to choose what they want with an online order. Products are dropped off at a central location and then re-boxed for orders. Some organizations deliver and others have a CSA-like set of locations for pick-up. Farmers are paid by the organization. An exception are Madison Farms and Pilot Mountain Pride, which handle orders by phone and email as they are aggregating for fewer, larger customers.
Management vision and skill is extremely important in these small companies with limited staff. It probably determines success or failure as to whether the organization has capable and experienced management.
Philosophy: These organizations have a distinctive philosophy based on “neighbors feeding neighbors” and “local foods systems.” Also, they are focused on connecting local farmers with expanded markets, more income, and reduced risk. All are working to shift or expand production of high value products and respond to the increasing demand for local items.
Relationship with Farmers: These organizations work very closely with farmers and want farmers who are interested in being part of the organization, including by support of the philosophy. This includes a willingness to work in partnership with the management, to try new things, and to evolve with markets. According to three buyers, an ‘entrepreneurial’ attitude is in contrast with some of the older farmers who relied on tobacco and did not have to be responsive to buyers’ needs.
Specialty distributors are among the most willing to work with very small and beginning farmers. They are willing to train farmers in several areas, including computer skills (must be able to work with online ordering, posting information about their farm and products, etc) and in learning to follow through with commitments on product quality, quantity, and delivery deadlines. Transparency in sourcing is highly significant for these organizations. Almost all require liability insurance or co-insure farmers.
Obstacles: Demand outpaces supply. More farmers are needed. In addition, these are noted: (1) Lack of supply of high value items, such as fruits; (2) seasonal limitations mean that more products are needed for fall and winter ‘shoulder seasons’ (want more products in the fall and winter, necessarily processed foods or greenhouse greens, etc) (3) Want to deal with larger customers such as restaurants who might be able to absorb occasional higher volumes OR as a way to scale up. Madison Farms refers to the need for stable partnerships amid market evolution, finding high value products that then creating a stable buying relationship. (4) These are among the easiest organizations to work with, yet they talk about the importance of the relationships and how farmers must ‘buy into’ the philosophy of the organization and support it.
Strengths: All of these companies / organizations are increasing in demand for their products. The sale of 100% local products creates a strong and clear brand. By continually educating their consumers in the value and quality of local foods, they are building a long-term commitment to this market. Also, they work closely with individual farmer and coach in production and in business skills. They plan to do this and are willing to do this.
Sub groups: Downeast Connect, Feast Down East, Piedmont Local Foods have a similar structure and are fairly small. Produce Box is an LLC and sources from the widest geographic area. Its delivery system is unique and it also has targeted urban neighborhood buyers. Sandhills is a Co-op and has membership who provide some of the labor though it has a paid, professional staff as well.
Pilot Mountain Pride and Madison Farms have the most experience selling to distributors and grocers and have a very strong extension partnership.
There are two outlier group. First is Bread Riot because so very tiny and also because it is as much advocacy group as food provider. Second is Mint Market which is a start-up specialty broker linking up farmers with local chefs in the Durham area. The Mint Market website makes it possible for farmers to sell to more than one chef and for chefs to buy from local farmers with an easy, online transaction. The owner described it as a ‘software company’ and the website explains that the business goal is address the reality that it’s difficult for buyers to find entry into local foods suppliers, so Mint will “take the chaos out of local foods.”
Advantages for Farmers: They are able to learn from managers who can coach them into selling. Rules are spelled out and mission is spelled out too. Things are very clear and the same for everyone.
Farmers are able to sell to an organization/ company which then creates more markets, without farmers doing the marketing themselves. Farmers work as a group to build up their shared opportunities. They can work together.
Because specialty distributors sell 100% local, they are actively looking for more vendors especially those who can produce special, high value items.
Some added attention is brought to the farm – farmers strengthen the organization’s brand – so have to be comfortable presenting own farm though much less personal ‘sales’ and labor than would be required at farmers markets or selling to restaurants. This is probably a good introduction step for beginning farmers who can then diversify and add other markets as well.
B. Wholesale Distributors 5/6
Eastern Carolina Organics (produce) # 6
Farmhand Foods, (meat) #20
Honeycutt Produce, Chadburn (produce) # 3
Ward Produce, Raleigh (produce) #26
Albert’s Organics, SE District, Charlotte # 40
Definition of Local: Many use state as the definition, while others use a region that includes neighboring states. Some use mileage instead, especially those which have outlets near to other states’ boundaries.
Description: This is a very broad category of businesses who purchase items to resell to retailers, restaurants, and institutions (eg. schools, hospitals, prisons).
Those which specialize in supplying restaurants are called Food Service companies (see below). All wholesale distributors in this group source nationally and often internationally with the exception of two: Eastern Carolina Organics and Farmhand Foods, both of which provide close to 100% state-sourced products with the rest coming from either SC or VA.
The goal of a successful wholesale distributor is to provide consistent, predictable, even uniform high quality food, supplied in a steady quantity, over time. To accomplish this, wholesalers develop a supply system which is broad in what it can supply. The scale can be very large with crops sourced in several different places, aggregated, and then distributed to many different areas. The concept of buying local – with its intrinsic seasonality, variability, and geographic definition – may defy the logistics of many wholesalers. It requires that the sourcing identity be preserved and then shared with the customers who are interested. So companies are not likely to initiate such a logistical change unless their customers are demanding of it or if there is a sizeable opportunity.
Interest in Local: Variable from High (ECO and Farmhand) to Medium to Low, at least based on current practices. Many companies source crops in NC (especially sweet potatoes, melons, cabbage, collards) but these are not often labeled as local; they may still provide an opportunity for farmers in the general wholesale market even if it is not the “local foods” market.
What ECO and Farmhand are doing is very much scaling up based on 100% local suppliers and increasing the number of those suppliers, so they are bringing in newer and larger suppliers to the marketplace. Local is the reason for their existence.
At the same time, we have the work of the traditional, Raleigh-based wholesalers / food service companies which are taking a different approach. Those interviewed affirmed the interest in local product and how much it has grown in the past few years. They would like to source and identify local products more if it works for them logistically. With smaller, state-wide or regional territories, they might find it workable IF they have capable suppliers of sufficient size. They don’t have the capacity to necessarily train those folks, though. This is a relly important area to watch.
Then there are the huge national suppliers such as L&M and Lippman. For these companies, local markets have a different definition, which is logistical. Product that is purchased in a state can be managed so that it stays in that state for a local designation rather than being sent to another state. In fact, L&M offers this as a service to others, to consolidate and manage logistics for local market demands. L&M is certainly exploring this kind of participation and willing (to some degree) to look at how it can do more. Plus, L&M is involved in the East Coast Broccoli project out of Cornell, consulting in the area of efficient logistics. It’s similar to Foster-Caviness’ work with its huge produce coop (based in CA) which will similarly manage supply streams so as to keep more product within a certain region – in response to interest from their chain restaurant clients for local food. I think this is very interesting. Both L&M and Foster-Caviness are spotlighting farmers on their websites to put a face on the food.