F.A. Farm

I just watched a video on the problems of small-scale organic milk production in Maine. Here is the weblink: http://video.nytimes.com/video/2011/02/18/us/1248069613774/moomilk.html?nl=todaysheadlines&emc=thab1

The video focuses on small-scale dairy producers who had grown up on their own farms and had been milking cows for as long as 40 years. These were true family farms, where the farmers are doing the milking themselves, unlike so many large dairies here in Washington state where the "farmer" does the managing and then hires illegal aliens (or undocumented workers for the politically correct) to actually do the milking. The Maine farmers turned to organic milk production several years ago to increase their profit margin. [Emphasis on niche marketing.] They had quite lucrative contracts with a "large conglomerate," as they say in the video, and were actually making a living. [The power of corporate marketing and distribution.] However, in February of 2009, the corporate conglomerate dropped them because of market conditions. This put the farmers in a deep hole. Their response was to take out a massive loan and form a co-operative to market their milk under the Maine's Own Organic Milk brand (MOO Milk). [Using corporate-style branding, as well as succumbing to capital requirements from the corporate banking industry.] Even with a brand, a quality product, and distribution to all the local markets (including supermarket chains), the MOO Milk brand did not "take off." The farmers were faced with either going back to mainstream nonorganic production (making $20,000 a year on $750,000 worth of sales for example, as mentioned in the video) or trying to somehow weather the storm. One farmer went back to mainstream production, but the others held on. In June 2010, they lucked out. Somehow, they convinced Whole Foods in Massachusetts to pick up their brand and now have a bright future. (The power of corporate marketing buying power.) 

So what is wrong with this picture? Several things obviously.

1) There is no doubt that these people were real farmers, born and bred on the land, and doing their own hard work. There is absolutely no doubt that these people cannot do any better at managing their production.

2) The real problem was that the local populace did NOT buy their product. As one frame in the video indicates, the price for their milk was $3.99 per half gallon. This is agoodprice, afairprice, and comparable to the price paid for organic milk in supermarkets right here in Whatcom County and across the country (I pay this price for milk myself). Yet the Maine consumers would not support family farms right in their own county.

3) The farmers quoted in the video mentioned time and again that demand for local food was growing, yet they couldnotsell enough of their product locally. As right here in Whatcom County, there is a significant disconnect between what the marketeers told them via their brochures and poorly-designed survey results. For example, in a recent survey by a business marketing organization right here in Whatcom County, people were surveyed andsaidthey would buy local food. The survey designers then took this to mean that there is unmet demandfor local food. Of course,sayingyou buy local food does not mean that you actually do so, just assayingyou support local farmers does not mean you actually do so. This is an example of poor survey design, as well as poor analysis. It is similar to the difference between sociology and anthropology. The sociologist asks people if they recycle cans and bottles or throw them out. The anthropologist goes through people's garbage and actually collects evidence whether they recycle cans and bottles or throw them out.

4) The farmers in the video were using corporate marketing, like branding, and tapping into corporate capital acquisition, like loans for infrastructure and distribution. They used the modern business model and tried to compete on the same level as large corporations, butwithoutthe marketing muscle corporations have. Setting their own price was a good tactic, but they could not control the price of their inputs, nor the price of their outputs. Thus they were buffeted from both sides of the input/output continuum.

5) The salvation of the farmers who hung on was determined by Whole Foods, a large corporate conglomerate two states away. The customers for MOO Milk were urban yuppies who buy from a large, nonunion corporate entity often called "Whole Paycheck," and which has come under fire from many progressives. In real terms, it would have made little difference if the salvation contract had been Wal-Mart. The real problem is that it took a corporate bailout to save MOO Milk, because the local people right in Maine would not buy local milk.

So what is the lesson from this video? If you are a local farmer and local consumers are not willing to buy your product, you cannot survive unless you get lucky. Is catering to a large corporation the salvation of small-scale agriculture? What a chilling thought! Yet you hear this propaganda stream all the time. "If only we can get Haggens or Safeway to buy out product. If only we can market it more effectively." It is all bosh.

Local demand is 1-3% right here in Whatcom County. That is the percentage of food that is consumed locally from Whatcom County farms, the percentage dependent on which marketing organization you talk to. These same marketing organizations tout the growth of local demand all the time and a 20% growth rate year to year is often the figure quoted. Well, a 20% growth rate of 3% is still only .6%. So . . . if local demand goes up this year by 20%, local consumers will still only consume 3.6% of the produce grown in Whatcom County! In terms of significance levels in statistical modeling, the amount of local food consumed in Whatcom County is essentially random. Think on that for a second. If you are producing food for a local market, your sales are essentially based on random events. The rest of the food consumed in Whatcom County comes from outside the county, outside the state, and outside the country.

It isnotmarketing that is the problem. Everyone knows a farmer growing local food and buying food from that farmer is just a phone call away. Driving to the farm to pick up food is similar to driving to the store. Prices are very often cheaper at the farm than at the supermarket. The produce, meat, milk and eggs are fresher and often more nutritious than the same items bought in the supermarket. The real problem is the mindset of the local populace. Just as the Maine consumers would not support local farmers producing a quality product, even when presented inexactly the same wayas other supermarket items, so Whatcom County consumers do not support local farmers.Local sales are essentially random events.This is not a recipe for survival in the post-peak oil world.