Spring Hill Farms

  (Newark, Ohio)
Heritage Breed Pastured Pork, Chickens, Grass Fed Beef
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Small Farmers - Times Are Changing

The demand for local, organic, farm fresh meat and vegetables has been on the rise for the last several years.

This means that people are actively seeking out this type product. Many “marketing type” farmers have been enjoying increasing sales every year.

According to Finding Dulcinea, In Indiana, the number of small farms increased by almost 80 percent from 2002–2007. Greg Preston, director of the Indiana Agricultural Statistics Service, told the Indy Star, “We are getting a lot of newer farmers coming in that are smaller—going into direct marketing, specialty products, organics, locally grown, this type of stuff.”

My farm has been struggling to meet the demand since shortly after we started selling direct. That is in part because I come from 25 plus years of sales and marketing experience.

But it’s also because the market for local farm food is growing and I’m enjoying the fact that people are actively looking for farms like mine.

But I’ve been around enough new and emerging markets to know that won’t always be the case.

Take for instance the big mortgage boom up to about 2008. I owned a company that used mortgage lending as a way to grow our business. We used many different mortgage companies and brokers all over the United States.

There was a mortgage broker on every corner. Many of them were so busy that they wouldn’t even talk to us about working with them. They had more business than they could handle!  New mortgage companies were starting up daily.

Why?

Because it’s pretty easy to take a client who has an 8 percent mortgage and put them into a new one at say 5.5 percent. I mean how much sales and marketing does it really require?

The broker simply says “Mr. Jones we can reduce your mortgage payment by $200 a month and give you a rate that’s 2.5 percent lower than what you had.”

So for marketing all they had to do was let people know they were open for business and give some teaser rates on the radio or internet and people flocked in to refinance.

But ever so slowly I started getting phone calls from those brokers who didn’t want to work with me a couple of years before. They were seeing a slow down in the refinance craze. They didn’t necessarily say that to me but I knew what was happening.

The demand was slowing and the competition was getting fierce.

Fast forward another year and many of those shops were out of business and gone forever.

Who was left?

The companies that had focused on running a lean and mean mortgage shop and had focused on developing long term marketing strategies. They did honest business and had a long term mindset.

How does this relate to small farms?

Because sooner or later the demand is going to slow down and the competition is going to get fierce.

Take the previous quote from Dulcinia. There was a eighty percent increase in small farms in Indiana from 2002 – 2007. That means there were a whole lot more farmers supplying the market in Indiana than previous.

Now if several of those farms were near you…you noticed it!

Farmer’s markets are increasing by leaps and bounds. Farmers are seeing prices come down to be able to move their goods as they face the Wal-Mart shopping mentality.

So called “farmers” are bringing in produce from the wholesale house and selling it as local. In my area if you go to the farmer’s market to sell pork or beef, you will be competing with all the butcher shops in the area.

CSA’s are exploding all over the U.S…..

Folks – times are changing.

Don’t get me wrong competition is a good thing,

BUT IT WILL CHANGE THE WAY YOU MARKET IF YOU’RE GOING TO STAY PROFITABLE AND KEEP THE DOORS OPEN.

Then add to that huge corporations are working night and day to fleece the consumer into believing that their food is really pretty much the same as what you can buy off a small farm.

Big agriculture is teaching their farmers how to relate to the public and present themselves as the only solution to the food shortage. They are talking about using Facebook and Twitter to reach out to their communities.

Grocery stores are featuring local farmers that supply them with produce.

Localharvest recently reported many CSA’s experience as high as a 40 percent turnover each year.

Losing that much business per year is unsustainable. If you have to replace that many customers per year you are swimming up stream on your way to broke.

I was talking to a farmer the other day who said he had a lady call him about grass-fed beef. By the time he got back to her (a couple of hours later) she had already found another farmer who had sold her a quarter of beef.

He got a rude awakening that he’s not the only guy in town with grass-fed beef!

In some ways small local farms supplying people with food is still in it’s infancy. But folks things are changing.

What’s your plan to stay on the cutting edge of this growth and rising competition?

  • Do you have system to get new customers?
  • What’s your response time when someone calls or emails you?
  • How easy is it to do business with you?
  • What’s your process for retaining customers and turning them into word of mouth advertisers?

Begin to find answers to these problems now before you end up losing out to the farm that does have it figured out!

Until Next time…


 

Small Farm Direct Marketing

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Become a Farmer of Choice

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This is not a commodity!
I recently read an article from Ag Web titled "Make Yourself a Farmer of Choice."

When I saw the title I was intrigued as this particular website is focused on industrial agriculture and commodity products as far as I can tell.

I thought "this should be interesting, how do you become a farmer of choice with a product that is a commodity?"

The author started out saying "how you position yourself as a farmer will determine your success with suppliers and buyers."

Ah so we're talking about the relationship with our "suppliers and buyers."

What about customers?

Well as a commodity farmer you don't have customers. At least not a customer as the small farmer who sells direct has customers.

I mean you go down to negotiate your grain sales, how much negotiating power do you really have?

Or you take a load of cattle to the buyer, and you get what the market says you get. Many people don't realize it but almost all commodity cattle is bought "on the rail."

That means your cattle are slaughtered and hanging on the rail before a price is decided.  

Um, what if you don't like the price? Do you load up your carcasses and take them elsewhere?

The author also said

"Ask yourself:

  • What do we do best?
  • What is our target customer?
  • What needs do we fulfill for them?
  • Who is our competition?
  • What makes us different from them?"
All really good questions but as a commodity farmer I'm still left wondering how you would have much of a direct impact on these issues.

I'm certain you would have some impact but not nearly what the small farmer who is selling direct to consumers would.

The article went on to say “You need to know what sets you apart from your competitors. Your competition is anyone that farms around you.”

Huh?

Maybe I'm misunderstanding the authors intent here, but how could you be in competition with your neighboring commodity farmer?

The very definition of commodity defies it.

Commodity - A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers.

I can't figure out how you make a commodity competitive. From where I sit the commodity farmer has the least control over his products value in the marketplace.

The local commodity buyer doesn't care about how you raised your cattle on grass and never gave them hormones etc. They want to look at carcass quality and that's the end of the story. They are looking to get the price down not find ways to pay you more.

And grain? What kind of story can you tell the grain elevator and get a better price? They look at a few factors of quality and test weight and it is what it is...take it or leave it.

The best advice I can think of for a commodity farmer is start transitioning away from commodity sales with the intention of moving as much of your products to direct sales as you can.


Until next time....
 
 
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