Farm Profit = Market Success
(This post contains an edited version of the keynote presentation I gave at the Illinois Farmers Market Association conference in February. As such, it is aimed at farmers market managers specifically, so vendors and farmers should forward this email on to their market managers!)
I’m going to start this talk with a joke that is not even funny.
This is a dangerous sentiment that I’ve heard throughout my life working in and around farms. It has gotten a new life with a few high profile journalistic pieces in the last couple of years. There was a Salon article that got a lot of play last year entitled “What nobody told me about small farming: I can’t make a living” and a New York Times article entitled “Don’t let your children grow up to be farmers”. There have been others like them and this has become an oft-repeated story that the food movement has left farmers out of the party. That farmers are not making any money.
I think there is a lot truth to that for sure. However, I think farms must do better economically if we hope for the momentum of this movement to continue. I think it is very dangerous for the future of our movement if we internalize this idea that you can’t make money farming. So bear with me as I talk about money and farming — I know most of you are market managers and this may seem like it is not your problem, but I’ll tie all of this back to farmers markets and how we can continue to grow.
Lets Talk About Money
First off, I’m going to say that I’m not scared of profit. I’m not scared to talk about money. I think we need to talk about money more often. I was at a farming conference earlier this month with 100s of sessions on everything from small scale hop growing to sessions on farming while balancing family life, but not one session in the entire conference directly addressed the topic of farming profitably. Who is going to pay to come to that conference next year if they don’t make a profit this year? I think that is a huge oversight in our little world. We can’t be so scared to talk about money and profit.
I’m not talking Wall Street type profit. I’m talking about providing a valuable product or service to customers and getting fairly compensated for that service. I’m talking about building a farm business. This is not about getting rich. This is about having a farm that works for the farmer and supports a family. It is about developing a farm to be sustained in the long term.
We struggle in the local food and farmers market community with low expectations for the financial viability of farms. I argue the sadly contrarian notion that you can make money farming! I’ve seen it done. And that in fact we must make money farming to ensure the long term viability of markets, farmers, and that we can attract the kind of smart, ambitious young people who can make a go of the complex system that is the modern small farm.
I think we are a crossroads in local food where we no longer have the wind so strongly at our back in popular culture. The big food companies and many startups are competing for the same food dollars that are spent at farmers markets and CSAs. This is the moment where the local food movement must mature, and we mature by making local food economically sustainable.
Let me first start with a story of my background and how I came to stand in front of you today.
I grew up on a small farm in southwestern Pennsylvania.
The farm is 70 acres total with 2-3 acres of flat land to be generous. This is old sheep farming country. My parents raised sheep, hay, and put in a big garden every year. They never made a living from the farm and worked off-farm jobs during my childhood. My dad in a coal mine and my mom as a university professor.
This is a back-to-the land community from the 1970s and there is still a small handful folks now in their 60s living on their farms.
I was home visiting over this past Christmas and was talking with one of my parent’s friends, a man I have known all of my life, about his farm and where he sees the future. He was opining the fact that none the kids who grew up on these farms live in the area any more he said we “all went urban”. And that is true to an extent although I am still working with farms and another kid from this community is a wine grape grower in Oregon. He said he hoped to be the old sage at this point and could teach what he learned over these years.
The fact is that no young people have moved to the area. There has been no fresh blood to reinvigorate this community.
I do feel badly for him. I wish he had someone to pass his knowledge onto, but the fact of the matter is that none of those folks ever made anything close to a full-time living from their farms. They were school-teachers and postmen and coal miners who farmed on the weekend.
There’s nothing wrong with that, but from that context it looks like farming was a very expensive hobby. If there was a viable business to step into, I’m sure some of the kids of this community would be more than willing to step into roles in those businesses.
That little farm community is pretty much dead at this point and this experience is mirrored in farm communities across the country maybe with different particularities of the situation, but we know that in general farmers are getting older and young people don’t see farming as a viable profession.
Due to my experience growing up around farms that we are not profitable, as I got interested in agriculture as a profession and later managed a vegetable growing operation, my question has always been, “but is it a living”. I think I’ve always had this business headed approach to life and I think about most things this way. I look at the business first and then the romance of farming, that comes second for me. If it is not a viable business, it does not make sense to me.
It actually scares me a little bit because farming sustainability is a generational project. “Short term” on farm means 10 years to build soil quality and if the kids of our farmers don’t take up farming, then you lose all of the knowledge of the land and the care of that land. You lose all of the investment that the farm family put into soil, equipment, and customer base.
To keep this going over the long term, we need professional farmers who can focus 100% of their working hours on farming.
Farming is a hard business and it is a profession. It can’t be an afterthought if it is going to work as a business. This isn’t something you can do 5-10 hours a week and expect to get a return from the land. You need to immersed in it. I call it the “shower theory” of business — what problem are you thinking about when you are in the shower? or walking the dog or whatever? Is it a problem from your day job or is it a problem on the farm?
If you can’t devote 100% of your energy to the farm, I don’t see how you can make a go of it in the long term.
We need farms that reward the farm family for their hard work and also their investment in the farm. It is no small thing to provide a family with a middle class living. There are mortgages to pay, insurance, retirement savings, home improvements and education savings. The list goes on and on.
Of course a farm owner will struggle for the first 3-5 years and maybe not make a huge amount of money in those years. I have heard from a couple of farmers who say that the magic number is 8 seasons .. after 8 seasons it better start working or maybe you need to find something else to do. And this is true of any small business. It is phenomenally hard to start any business, and farming adds a lot of uncontrolled variables like weather on top of it.
But to have true stewards of the land who are going to feed the soil we need people doing this work full time. We need them to have the time and money to advance themselves professionally: go to conferences, read books, buy services that will grow their business.
In fact, my focus on this issue of farmer profitability is somewhat self-serving. We sell software services to farm businesses and a couple of years ago I was thinking deeply about my “perfect customer”.. the type of farmer that I wanted to serve. And I realized I wanted to work with professional farmers, people who are making a good living from their farm.. those are the kind of people who are going to buy software from someone like me.
So I know this is a farmers market conference and maybe it seems like I am missing the point with all of this talk about farm profitability.
Not true: perhaps this is a truism but a thriving farmers market needs to have economically successful farmers. We call it a farmers market for a reason, right? It’s not a craft fair or a flea market. It’s a farmers market!
I know you have a lot of other goals for your markets: placemaking, community development, and all of that, but I believe that the bedrock of a farmers markets are the farmers that sell there.
So I think as farmers market managers, you need to focus on making sure farms are making money. That might not seem like your job, but if they don’t make a living, they will not be back to your market next season and everyone will be worse off for it.
It’s fine to have to have a couple of weekend gardeners who bring some produce (as long as they are not undercutting the professional growers!).. but hobby farmers won’t make the same investments that a professional grower must make. Take the example of season extension. Is a weekend gardener going to invest in a high tunnel to extend the tomato harvest by another month on either end of a season? No! Only a professional grower will do that.
And customers want an economically vibrant farmer, even if they don’t know it.
This kind of farmer exudes care in his marketing: he has invested in signage, he has well trained staff running the stand, they are friendly and not stressed. He executes his post-harvest cooling because he has been able to invest in the equipment to do it right so the vegetables are top notch. He has a wide array of products for sale.
We have a farmer like this in Pittsburgh. There is a good market in an up-and-coming neighborhood called East Liberty and it is a bustling market. There is one farmer that has line of 20 or 30 people during the whole market while many stands are customer-less. He needs four or five staff people to keep serving everyone. The products look great, the signage is top notch, everyone is wearing matching shirts and smiling, having fun. People are willing to wait for the experience of buying from this farmer and he is obviously financially successful doing what he is doing.
As farmers market managers, I encourage you to look more into the economic viability of your farmers. The farmers who are making a good living at what they do will be a draw for customers for the long term, they will invest in the market, and they will even pay vendor fees!
Know what success is for a farmer at each market. Do they need to make $500 or $1500 to make that day worthwhile from a money standpoint? Check in throughout the season with your farmers and make sure it is working for them. Ignoring the problem, pretending it does not exist does not make it go away.
And price. That’s the elephant in the room when we talk about economic sustainability of small and medium scale farms.
It might simply cost more to produce food in the way that our farmers are doing it while providing a living wage to farmers and farm workers. Farmers must know their cost of production, ensure they are doing everything they can to produce efficiently, but in the end they need to be willing to charge what they need to to keep farming. Farms are not charities built on the backs of our farmers.
When farms need to charge more than the grocery store, they need to tell that story through marketing — that is the beauty of direct marketing — you have a chance to talk directly to the customer — and we need customers who will be willing to support farmers at that price point. Perhaps they will be spending more on food. And if the market does not support that price, the farm needs to go back to the drawing board and adapt by not growing that product or finding a different way to produce it.
There is a fear among some of the farmers and local food advocates that I talk to that the local food movement has peaked.
In fact one my favorite markets in Pittsburgh has just decided to close citing “the ubiquitous farmers’ markets and availability of organic food in every store now has made it very difficult for us to keep going.”
So has the local food movement peaked as NPR reported last year?
Part of what has happened is that everyone else has raised their game. Indeed the market that closed in Pittsburgh wrote this in their farewell email:
“We are proud that we helped to pioneer organic food in Pittsburgh and indeed established the very first organic market in this great city. In a way, the world has caught up to our vision–organic and local food is widely available now, compared to when we started thirteen years ago.”
In those 13 years, everyone has taken notice that eaters are demanding local food. Everyone from the local grocery store to specialty stores like Whole Foods to delivery services are eyeing your best farmers market customers. This trend is only going to increase over the next 5-10 years so be ready to fight hard to attract and retain your best customers.
Here are some companies that are competing for local food dollars. Even venture capital in Silicon Valley has taken notice of our customers by supporting Good Eggs to the tune of $52 million.
There are services like Blue Apron that deliver perfectly apportioned recipes to people’s doors. As a farmers market, you must be clear about how you will compete with these services. They are not going away.
What worked last year in your marketing, won’t necessarily work this year and in the years to come.
We need to remind people why they should care to go out of their way to shop at farmers markets — let’s be honest, it almost always is an inconvenience to shop at a farmers market versus simply going to the grocery store.
We definitely compete with other sources of good food like these companies up here, but we are also competitive in terms of things people can care about. In local food, we are asking people to care about where their food comes, about the livelihood of farmers, about eating better – maybe even paying more for their food – but there are many of other problems in the world: homelessness, global warming, education, the list goes on and on. We must always clarify with customers why it is important that they give local food some of that energy. It is limited and many different causes are vying for that energy.
Why should someone spend 30 minutes of their day to come to your market instead of ordering Blue Apron directly to their door?
I think in general, for people to continue to care and shop directly from farmers at markets and through CSA programs, it has to be about more than just the food. This insight came from Farmer John at Angelic Organics.
The relationship needs to be with the farm and not just the food.
Meaning that the food they bring home from the farmers market is infused with the experience of buying from the farmers market, of supporting a local farm, of feeling good about what they have purchased. Good food is easy to find in many places now, but food with a story is special. The farmer and the market can never be abstracted out of that. Large corporations and start ups can’t compete with us on story and warm feelings.
If customers are comparing farmers markets to the convenience and price of the supermarket, you will always lose that customer in the long run. They are there for the experience, for the story.
You must tell the story of the farmers and why it is important to continue buying from, you must connect the dots of why local food is important for the health of your customers, for the environment, for the local economy, for the farmers.. Don’t trust that your customers know what you know, you must keep retelling your story and what it means in the larger context as well in your customer’s individual lives. It bears repeating, year after year as you bring more people into your orbit.
Be honest with your customers about where products are coming from. If you have rules about producer-only, be clear about that and make sure farms stick to those standards. If you don’t have rules about this, consider at least implementing clear signage. Yes, it’s nice to be a one-stop shop for people, but if you are just competing against a grocery store, I think we will always lose over the long term.
Excellent communication is imperative.
Facebook, email lists, websites — we are even working with text message reminders for farmers markets and loyalty programs. That product is called FarmFan.
For example. in this infographic, 2/3rds of eaters said they would feel motivated to buy local food if they were notified about promotions of in-season products.
None of us love change and I am not a lover of social media and the distraction that it brings, but we must communicate where people are and it is a huge opportunity in the right hands.
One great opportunity is turning turning occasional customers into every week customers. Your best customers are likely going to come every week without you needing to prod them, but those people who just come a couple of times a season.. if you can just get them to 2 times as much, that is a huge win for your market. These are the people who are on the bubble.. they are not yet so sold on the whole notion. They need to be fed the story, they need to be communicated with.
Focus on how you engage with these customers and you will see some big wins.
By focusing on the whole life-cycle of the customer from interest to visiting the market to buying and then cooking the food with recipes, we can identify how to engage with customers based on where they are in their relationship with your market.
If we work together as farmers, market managers, and eaters to solve these problems and to communicate our value proposition. If we plan for success, instead of hoping it works out, there is a lot of growing left to do for local food.
I don’t know why I have been wired this way, but my brain always thinks about the business first and fuzzy stuff second. I love all the fuzzy good feelings that go along with farmers markets, but I believe that comes after it works as a business.
If you attend to the financial success of your farmers, you will be also setting up the success of your markets.
Take the time to build a plan for outreach and communication with your community. I will talk more about that during my session later today, so join me for that if you want to talk about specific techniques.
As a marketer and a business person, that is my call to arms. We must run our markets and our farms as businesses and continue to learn at conferences like this. It really is “one dollar, one vote” and the more we can get eaters to vote with their dollars, the more we can do to change the food system in this country.
It is a multi generational project we have ahead of us. This is not going to change overnight, but success engenders success and will attract more smart, passionate people to our cause as farmers, eaters and advocates.