When we founded this farm, and especially when we decided to go full-time, we assumed we would be production-limited. That is, our main challenge would be growing enough product to meet demand and make the income we needed. We figured that with good quality, good marketing, and organic status, our products would be popular and in demand in a generally educated, liberal college town with a large farmers market and many locally-oriented restaurants.
We were wrong. This year especially, we aren’t coming close to selling what we grow, and that’s a real problem. After a decent spring, our market sales have gone down significantly compared to last year. We’ve also had some crop failures or disappointments, but even judging just by what we actually bring to market, sales are well below production. I ran some numbers from last week’s market (we keep clear records on exactly what we bring to, and from, market) and the data bear this out. The table below uses numbers from all the perishable items we brought to market (everything but garlic and onions), in other words everything fresh we need to sell that day or it’s lost income. The first column shows the product’s value as a percentage of the total value on the stand; the second column shows the percentage of that item that actually sold. The products are in order of lowest total value on the stand to highest. I’ve intentionally left out the actual product names; the point is the overall pattern.
Overall, we only sold 68% of the total potential value on the stand last weekend. While we can often sell out of small specialty items, we are not making the larger-scale sales needed to really bring in income. We can’t make a living selling just niche products like garlic, herbs, and edamame; we need the regular sales of tomatoes, squash, cucumbers and the like, but customers are choosing not to buy those items from us in meaningful quantities. Running these numbers confirmed what I’d been instinctively seeing all summer: we’re bringing home a lot of very high quality produce, while overall earning less than last year. That doesn’t work for us. So what’s going on?
First, here’s what I think we’ve done right over the past few years:
Good marketing. We have a good web presence, with a website that draws many compliments and a reasonably well-read blog that provides useful and timely information, including cooking ideas and advice. We’ve been featured in most Columbia-area publications, sometimes more than once, and have been written up in many local food blogs. We’re still one of the few area farms with a decent online presence. We’ve held multiple on-farm events targeted at our core audience, including open houses, multiple on-farm meals for the local Slow Food chapter, and other events. We’ve also cooperated with Slow Food in doing many events at area schools. We have a clean, attractive farm stand with clear branding that we receive compliments on every week. We’ve presented ourselves, accurately I think, as good examples of the kind of farmers consumers say they want to support: ethical, organic, foodie-minded, hard-working, full-time, environmentally aware, professional, etc. We refuse to mess with Facebook and Twitter, but given that virtually no other farm in the area does those things either, I can eliminate that as a core problem. I can’t see what more we could reasonably do to present our story, our message, and our products to the intended customer audience.
Good quality. I know our products are as good as you can get around here. I know it because we have extremely high personal standards for food, and we eat mostly our own products. I know it because some of the best chefs in town, like Mike Odette and Trey Quinlan, tell us our products are excellent and continue to buy what they can from us. I know it because we go out of our way to grow, and market, really fresh items. We never sell fresh produce more than a few days old (other than cured/dried items), keep multiple storage areas at different temperatures to ensure proper storage conditions, handle things carefully, cool produce quickly, keep backstock in insulated coolers at market rather than piling it in the open, minimize sun exposure on produce at market, and so on.
Good philosophy. People say they want organic. Survey after survey, media story after media story, the growing demand is for organic. We’re as organic as it gets; we stay away from all sorts of inputs and methods that are technically allowed but not as philosophically organic as customers think. We live the ethics we propound; generating little waste, emphasizing environmentalism and conservation, growing our own food, going out of our way to support other local farmers and businesses, etc. We are who we say we are, and we are who the general consumer base says they want to buy from.
What’s wrong? So why aren’t our products more popular? Why do most market customers not buy from us at all? Why do those who do, tend to buy $5-$10 at most?
Price. I can only see one place where our farm does not match up with others in the pantheon of consumer desires, and that’s price. We’re expensive compared to most stands at market, though I’d argue we’re pretty competitive with most organic produce in area grocery stores, especially when relative freshness and quality is taken into account. And our market prices match up well with the other few certified farms at market; we’re not out of line relative to our niche.We’re often more expensive than wholesale organic, but that’s hardly surprising since much of the industrial organic system is built on cheap migrant labor and subsidized desert irrigation, just like its conventional counterpart. We can make sales of items other market stands don’t have, like diverse garlic and edamame, but not anything for which we have competition, like squash, cucumbers, or tomatoes. That tells me it’s a price issue, because the quality is good and the quantity is there.
When you walk down the aisle at the farmers market, we look expensive because we’re directly competing largely with part-time farms which, even when well-meaning and well-run, have off-farm and/or retirement incomes and otherwise aren’t treating their business the way we treat ours, as a full-time long-term profession and not a source of cash on the side. It’s not hard to make a profit selling produce (especially if you don’t account for the value of your labor), but it’s awfully hard to make a real living. Our prices have to include insurance, retirement savings, health costs, long-term rolling averages of inevitable crop failures, home repairs, etc…all things that people with jobs or outside incomes just don’t need to think about earning from produce. I think I can count the number of real full-time professional farms at our market on one hand (there are over 70 overall), though I suspect most customers don’t realize that, and some of those farms have to make sales in big-city markets like St. Louis to stay in business, despite our market location in a city of 100,000. It’s like trying to run a professional auto repair shop with five neighbors doing quickie $10 oil changes in their garages because they like working on cars in their spare time.
Customer spending. In no way do I intend to demean the many loyal and interested customers we do have. But the reality is, there just aren’t enough of you, and the per capita spending just doesn’t work for a full-time farm. I wish I had time to keep data on every transaction amount at market, but I’d confidently say that our median purchase is less than $10, with a long tail toward $2-$4 and only a couple people who spend more than $20. If you figure a professional market farm has to earn at least $1000 per market (gross) to even have a chance (30 markets x $1,000 = $30,000 gross income, still not very much), then that’s roughly $4/minute in sales for a 4-hour market. Business isn’t anywhere close to that, either in quantity (lots of customers) or magnitude (significant single purchases).
According to 2009 USDA numbers, the average weekly grocery bill for a 2-person household could range from $80 to near $160. Assuming we’re targeting the middle-upper range of that spectrum, our normal market sale of around $10 is anywhere from 6%-8% of the total weekly grocery budget of an average market customer (even at the low end, it’s only 12%). Given that the USDA thinks vegetables should be 25% or more of any given meal, that’s a big gap in potential spending, and that’s really hurting us. Either people aren’t eating many vegetables, or they’re not buying them from us despite being theoretically/statistically able to do so. Granted, we don’t grow everything people could want, but we have a lot more diversity than most customers choose to purchase from us.
Using the $1,000 threshold mentioned above, even at $4/customer we only need 250 customers per Saturday to buy from us, out of the 3,000-4,000+ customers the market estimates attend every week. Our internal numbers tell me we’re getting far less than that; I think we’re more in the 70-100 range. That tells me that a farm like ours simply is not of interest to most market customers, even though it’s theoretically supposed to be. People vote with their wallets, and we’re not getting elected (note that I wrote about concerns with market last year, too).
Recession. This is the easy out, simply accepting that we’re in a bad economic time and lots of businesses and individuals are hurting, and people are cutting back and looking for cheaper options. Overall, it’s true. But what I’d like to know is, are people cutting back the same everywhere? Our sales this summer are down roughly 30% from last year (still not a great year). Is the same true for cell phone and electronic sales? Jewelry? Clothes? Cable/satellite TV? Tobacco? Will the Mizzou football stadium be 1/3 empty this year, with people refusing to pay huge markups for generic food and beer? If all of that is true, then fine, the recession is really here. If not, I’m curious why our food is high on the list of early budget cuts when other things apparently are not. Even with tightened belts, there are enough people in Columbia and/or enough coming to market to make even $5-$10 individual sales worth it, if the total purchasing activity was there at our stand (which it isn’t; see above). Virtually anyone can afford $4-$5 at a weekly farmers market, if they chose to spend it with us; that’s just not happening.
Going CSA. The situation described above is one, among many, reasons we’ve decided to change our business model to a CSA next year. While we still have to do the work to find and retain customers, going CSA gives us access to the entire area population instead of the small niche of market-goers. It guarantees an end home for what we grow, and lets us focus our work, skill, and stress on production, not marketing. It removes individual product prices as a factor in consumer behavior, replacing it with an annual return on investment that will be easier for them to judge and value. Long-term we still have to manage the farm well enough to grow enough product to support enough customers to make a good living, and that’s an ongoing learning experience, but it takes most of the uncertainty and inefficiency out of the sales end of things. And so CSA, we think, is a far more sensible business choice for us than the farmers market, with its increasing uncertainty, cost, and inefficiency, has become.