F.A. Farm

  (Ferndale, Washington)
Postmodern Agriculture - Food With Full Attention

Direct Marketing vs. Price-Making

Recently, a fellow grower asked why I sell through a broker, since my focus is direct marketing. My reply was simply that my brokers allow me to be a price-maker, instead of a price-taker. Since she is one of the sharper knives in the drawer, she immediately grasped the difference and the implications. However, this question deserves a fuller treatment for those of you not in the business who might be interested.

I grew up on a dairy farm and we had to take whatever price the creamery gave us for our milk; we had to take whatever price the elevator gave us for our corn and soybeans; and we had to take whatever price the stockyards gave us for our steers and hogs. In short, we were price-takers. What I want to do now is to be a price-maker. In order to do this, I must use direct marketing as my main marketing tool, although some changes are on the horizon in the field of marketing. For example, Growing Washington is a local nonprofit that serves as an interface between the grower and the consumer, whether they are individuals, restaurants, or institutions such as schools. Growing Washington buys from me at my price, even though I have to keep my price low since I am directly competing with other farmers. Yet this direct competition, in the context of setting my own prices, is far superior to just giving up pricing control to a wholesale distributor or processing plant. In short, the important point is to be a price-maker, and this requires some direct marketing. The more important component is to have multiple markets. I usually have 4-5 markets each year. This year they are 1) my CSA share program, 2) on-farm sales, 3) a multi-farm CSA share program, 4) a broker for the Ferndale Farmers Market, and 5) a broker for Seattle restaurants, schools, and their own produce stand. Only the first two are direct marketing per se, but the other three only have a single entity between me and the end user (I regard a restaurant as an end user). In all of these markets, I set my own prices. This is far different from being a price-taking commodity farmer, like we were back in the mid-1960's. 

Another market I am trying to develop is a buying club, and if this idea gets off the ground, I will be the facilitator between several Ferndale farms and the buying club in Bellingham. However, I will not be a broker, but rather a coordinator. As I mentioned earlier, there are different marketing alternatives being developed right now and hopefully, they will take some of the burden of marketing and distribution off the farmer.

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