Staying Competitive in Maturing Local Food Markets

“As local food markets mature and competition increases, it’s becoming harder for experienced farmers to maintain market share and new farmers to break in”, says Rose Wilson, business development expert.  In a maturing market, while overall direct sales of Vermont farms are increasing, the rate of growth is decreasing.

This means that for Vermont farmers, the average revenue per farmer is faltering as more farms and more local food add to the competition.  USDA Vermont census data shows that total direct agricultural sales continued to increase from 2007 to 2012, but the rate of increase declined and the average sales per farm dropped from $15,511 in 2007 to $13,245 in 2012.

VT Direct Ag Sales 02-12

Increasing competition also means that big brands and stores have joined the marketplace with greater professionalism so that maintaining market share and retaining customers require more effort

The farms that will survive and thrive in a mature market:

  1. Understand their customers
  2. Use market segmentation
  3. Are able to innovate with new products, services, and distribution channels,.
  4. Have a strong brand
  5. Can withstand price pressure
  6. Provide a great customer experience
  7. Focus on increasing communication and visibility

In maturing markets, farms need not only the early adopters and avid localvores, but also need to appeal to a broader and less committed audience. New potential consumers, less committed to core values of local food, will give greater weight to price and convenience in their decision, to buy or not to buy. A typical new product adoption curve encompasses:

  • Innovators: First people to join a CSA
  • Early Adopters: Farmers market regulars
  • Early Majority: Whole Foods, Co-op shoppers
  • Late Majority: Walmart, Supermarket shoppers
  • Laggards: Not driven by values, unlikely to seek out local food

Customers & Market matures

With local food now mainstream, this is a key time to use market research and assess your target markets. Who are your customers now, and could be your customers tomorrow?

More mainstream new customers will expect you to come to them as they have plenty of providers and choices available.

Here are some tips to help farmers identify market trends and differentiate themselves:

  1. Make a list of all the different types of people (e.g., mom, athletes, families, single folks, sports fans, millenials, baby boomers, ethnicities, income levels, avid readers, animal lovers, nature enthusiasts, etc.).
  2. Describe the characteristics of each audience.   Each will have different needs, habits, expectations, motivations, interests, values, and methods of communication.
  3. Research what is important to them, how to package, price and communicate a message which resonates and can acted upon.
  4. Evaluate methods of communication–where do customers shop, how do they absorb information, where do they learn about new products/services–do they read newspapers/magazines, listen to the radio, watch TV, use the web, text, e-mail.  If social media, which channels–Facebook, Instagram?

Within this larger community of consumers are many little communities, each trying to be heard and represented. You’re likely to find that as unit margins go down, the volume of units may go up, or profits from new services or products offset lower profits from mature products. So, all in all, you can continue to grow or stabilize your market.

For example, in February, Jasper Hill titled its e-newsletter “We’ve Got Game Time Snacks Covered!”   Jasper Hill is turning to mainstream America to attract a new market of Superbowl fans, not the typical high-end cheese audience.  In addition to the football message, the company has now created a more convenient product for everyday cooking.  Importantly, the cheese didn’t change, but it now comes in a pre-selected cooking blend, pre-shredded, in a resealable Ziplock bag.  Similarly, farmers and local food companies which provide meal kits have a strategy to respond to the demand for convenience.

Jasper Hill new packaging w:out title

Jasper Hill original product… New convenience offering.  Rose Wilson, National Viability Conference, 2017

Even when there’s not a lot to communicate,  big brands have learned that there are opportunities to rebrand by updating packaging or tweaking a product attribute as in “new look, same great taste!”; “new and improved!”

  • Can your product benefit from a different form, packaging, logo, tagline, and/or marketing materials?
  • Can you offer deals, sales, and incentives?
  • Can you cultivate brand loyalty in your existing customer base such that they still choose you over new competing entrants to the marketplace?
  • Do you have a contingency plan; if you can’t alter price, how will you communicate features and benefits, which make your product unique to maintain customer loyalty?

Innovation can mean inventing something new but not necessarily–it can simply mean producing, packaging or serving your product or your audience differently than before to retain or grab their attention. As the market matures and there are many more places to buy local food, the product begins to matter less and the customer service begins to matter more.  This means it’s time to evaluate your customer service. How could you be doing a better job?

  • Personalization matters: the customer needs to feel you’re speaking to their personal needs and interests. Sincerity matters.
  • Attitude and Demeanor matter: all staff and answering tools (automated v-mail, e-mail, etc.) need have a friendly and helpful voice.
  • Packaging and point of sale need to provide price, product & clear product attributes and usage information–people read labels and do want to know what things cost.

Communication & Visibility

When brands face increasing competition and consumers have more choices, communicating unique strengths and benefits is more important than ever.  Successful farmers find reasons to communicate with customers and do it regularly.  Repetition and more frequent communication can be a useful service to customers.  Jasper Hill sends out an e-mail every two weeks, whether or not they have something “noteworthy” to report. Three Cow Creamery started sending out an e-mail before a farmers market, reminding people to come and telling folks what happened that week on the farm. Even if the e-mail isn’t read, its subject title, if clear and concise, can be a good reminder about an upcoming farmers market.

Messages can also be linked to memorable days and actions e.g., Earth Day or Father’s Day flash sale or regular reminders about CSA pick up times.  Don’t forget key information such as phone number, e-mail, address and open times. A combination of off-line (e.g., postcards, signage) and on-line messages through social media can reinforces your messaging. And take advantage of free directories, such as your Chamber of Commerce, County food publications such as Addison’s Guide to Local Foods and Farms, as well as free online directories such as Google My Business (GMB) and Bing Places

In a nutshell, in a mature market, farmers need differentiated messages to convey their brand, products, and services repeatedly to reach each target audience using a mix of channels, which have been researched as effective. The fundamentals–a great product, a strong brand, and responsive customer service— will remain the foundation of a marketing strategy to thrive in the local food marketplace.  Need help?   Contact UVM Extension’s Farm Viability Team , Rose J. Wilson Business Development Services, and Vermont’s Small Business Development Center.

This article is adapted from Rose Wilson’s presentation MARKETING 201: Helping Farmers Stay Competitive in a Maturing Market, National Farm Viability Conference, Albany, 2017.

 

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Posted in Facts & Figures, Financial Mgmt, Marketing, Resources for Beginning Farmers, risk management

When Planting Goes Wrong . . .

By Jake Jacobs, UVM Agricultural Risk Management Education Coordinator

Crop insurance can help your farm recover from a crop failure. Did you know it can also help you manage risk at planting time? Most crop insurance policies include provisions that can compensate you if you are unable to plant or help you afford to replant your crop if necessary.

Cannot Plant the Acres

Am I covered?

Most policies include a provision for prevented planting with the exception of group risk (GRP, GRIP, and ARPI) and catastrophic-level (“CAT”) policies.

Eligibility

You may be eligible to file a claim if:

  • Your acreage is physically available for planting
  • Your acreage was planted in at least 1 of the 4 most recent crop years
  • An insured cause of loss occurred within the insurance period, for example:
  • Excessively wet conditions throughout the growing season which prevented nearby producers from planting similar acreage
  • A specific event, like flooding, which impacted only your field
  • You were unable to plant by the final planting date or during the late planting period (generally 25 days after the final planting date but varies)

 So you were unable to plant, now what?

You must provide notice that you were prevented from planting an insured crop within 72 hours after you determine you will be unable to plant. Then you may choose to:

  • Leave the acreage idle or plant a cover crop (and receive a full prevented planting payment as long as you do not hay or graze the cover crop before November 1),
  • Plant the crop late (your original production guarantee applies but is reduced one percent per day for each day planting is delayed after the final planting date), OR
  • Plant a second crop (you may receive a prevented planting payment equal to 35% of the prevented planting guarantee).

Payments

The prevented planting guarantee for most crops is 60%* of the production guarantee for timely planted acreage (the production guarantee is 65 or 70% of projected price).

* Some policies have additional coverage options available.

Replant

Replant provisions in insurance policies provide a payment to help producers replant after extreme weather destroys a planting.

Am I covered?

Most policies include a replant provision with the exception of group risk (GRP, GRIP, and ARPI) and catastrophic-level (“CAT”) policies.

Eligibility

The acres to be replanted must be:

  • Originally planted on or after the earliest planting date;
  • Either at least 20 acres total or 20% of the insured planted acreage (whichever is less);
  • Affected by an insured cause of loss such as a late frost;
  • Appraised as having an expected yield below 90% of the guaranteed yield in
  • your policy;
  • Determined to be “practical to replant” by an Authorized Crop Insurance Adjuster;
  • Replanted with the original crop;

So your planting was destroyed, now what?

  • Notify your crop insurance agent within 72 hours;
  • An adjustor will appraise your expected yield and whether it is practical to replant;
  • If applicable, replant with the original crop;
  • Your original planting guarantee will continue as if nothing had happened (as long as you plant before the final planting date).

Payments

The replant payment is typically equal to the lesser of either your actual costs of replanting or a formula provided in your crop insurance policy provisions (for example: for corn, the per-acre replant payment equals the projected price/bushel x 8 bushels).

The  Risk Management Agency Fact Sheet on Prevented Planting provides additional information.

Communicate with your agent about any issues with your crop, especially before planting deadlines. This is essential for receiving prevented planting or replanting payments.

Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the United States Department of Agriculture.  University of Vermont Extension, Burlington, Vermont.  University of Vermont Extension, and the U.S Department of Agriculture, cooperating, offer education and employment to everyone without regard to race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or familial status.

Jake Jacobs
University of Vermont Crop Insurance Outreach Education
208 Morrill Hall
jake.jacobs@uvm.edu
802-656-7356

Posted in Financial Mgmt, Insurance, production information, Resources for Beginning Farmers

Bed formers and Raised Beds – One size doesn’t fit all

Vermont springs and summers are as variable as ever. While rainy spells make raised beds a preferred option,, the growing season is just as likely to have prolonged dry hot periods where irrigation is necessary to keep plants from experiencing heat and water stress. Whether wet or dry weather, well-formed raised beds enable farmers to have more control over moisture. Benefits of raised beds:

  • Roots of your transplants won’t get wet feet in saturated soils,
  • Growing area delineated so plant damage and soil compaction avoided,
  • Elevated soils warm earlier in the spring,
  • Variety of implements can be used to make raised beds, including a walk-behind tractor.
USDA Office of Chief Economist - satellite image showing wetter than normal weather May 2 2017 .png

USDA Satellite Image

With wetter weather on average, raised beds drain more quickly after heavy rain events, which is especially useful for some Champlain Valley soils that have a high clay content. And then during extended dry hot periods, drip tape under mulch keeps soil moisture levels up.

The National Weather Service’s Climate Prediction Center gives three-month outlook for precipitation and temperatures. In recent years, the Northeast has been showing higher than normal temperatures, resulting in soils drying out faster so demand for irrigation is growing but farms need to make sure there is a sufficient water supply so drawdown on wells and groundwater is not a problem.  Intervale Community Farm has found that their irrigation system not only avoids crop losses of lettuce and other greens during extended dry periods, but also ensures higher quality vegetables, without signs of stunted growth (e.g. stubby carrots).

Spring soil preparation – scale makes a difference

Farming intensively on less than an acre, Shakey Ground Farm can’t justify the implements to plant and manage cover crops. In the fall, farm manager, Drew Slaubaugh, uses a 24-inch walk behind Troy tiller to make two-foot beds with a V-shape furrower, leaving a two-foot walkway and managing to keep tires in the same line. For cover to protect soils and keep weeds at bay, Shakey Ground lays down heavy reuseable plastic in the fall. Come spring, the black plastic has kept the soil dry and warmed it up more quickly so planting can begin in April for cool weather crops like kale and spinach.

Quickel's bedformer

Stony Loam Farm’s Bed Former, Charlotte, VT

Cultivating about 12 acres of vegetables, Dave Quickel, owner of Stony Loam Farm, has invested in a number of implements to manage green manures and prepare his soils. Almost all his fields are cover cropped during the winter, and in the spring, several implements are used to prepare the soils including plowing in the cover crops and tilling and mixing in poultry manure. Stony Loam cover crops mostly with rye, which has a high carbon to nitrogen ratio, so poultry manure is needed to improve nitrogen levels. Once the green manure is mixed in and soil is tilled, Dave uses a dedicated bed former to shape his beds.

Other farmers use roto-tillers, spaders, and different types of discs and cultivators to work their soils. Soil preparation is different depending on the soil structure and texture, with a bed former working best for soil with uniform aggregate size and reasonable tilth.

Dave Quickel & mulch layer

Dave Quickel with his bed former, Stony Loam Farm

Stoney Loam’s mulch layer lays down four foot plastic and attached discs throw soil on the plastic edges to keep it in place. This creates a three-foot wide bed. The beds are crowned, higher in the center so water runs off more easily. The plastic mulch keeps weeds at bay and the black color absorbs heat, warming up the underlying soil. This mulch layer implement also lays the drip tape underneath.  Over recent years, Dave has been pleased with his mulch layer, which he bought second-hand for less than $1000 (new these units cost about $2000+).

Newly-formed beds need a week or two for the soil to settle before planting. The bed former and plastic mulch layers to shape and cover raised beds and down drip tape in one pass are proving popular. But compared to a bed former alone, the price tag starting new at $2000 ranging up to $5000+ can be prohibitive.

These implements can be attached to the 3-point hitch on a tractor but the size needs to be compatible with the power of the tractor. Whether purchasing this equipment is the right decision depends on a number of factors: the amount of land cultivated, the time available for soil prep, the equipment already on hand and how it can be adapted to the soil and field prep given the cover crops. Actual usage and storage and maintenance practicalities should also be considered.  It may well be more cost effective to hire a custom operator with the necessary equipment and skill to prep soils and make the beds once a year.  Ideally, you’ll want to test a bed former and mulch laying equipment before purchasing and ask:

  • Is the size compatible with your tractor and three-point hitch?
  • Can you hitch it on your tractor easily enough?
  • How adjustable is the height and width of bed former?
  • Does it make the right size beds for your row configuration?
  • How are the discs aligned? Are they throwing in enough soil for the beds?

How much time and how many passes you make in the field depends on the type of cover crop mixed in, the specific implements in use, the soil, the the operator skill, and the weather. Finding the balance between enough soil prep and too much requires a fair amount of finesse. Too many passes in the field can damage soil structure and cause compaction; too few and weeds remain and outcompete crops. Alternatively, some cover crops can be harvested and ways of protecting soil health with low tillage can be explored. For more information on cover crop management, check out UVM Extension’s Northwest Crops and Soil’s program and talk to  UVM Extension’s Crop, Soil and Pasture team..

Suzy Hodgson, UVM Extension, Center for Sustainable Agriculture

Posted in Farm Equipment, production information, Resources for Beginning Farmers, Scaling up

Why Consider Crop Insurance?

Jake Jacobs, UVM Agricultural Risk Management Education Coordinator

The immediate answer to the question – why consider crop insurance –  is simple: agricultural production is risky business.

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In the wake of Hurricane Irene, Vermont, 2011, Photo Credit: Flickr, Carosauros

If weather were more predictable, agricultural producers would have no problem planning for difficult production years. But of course, that’s not the case. And it is not only major catastrophic events like Hurricane Irene in 2011 that cause losses.

Crop insurance provides a safety net against perils such as frost, drought, flooding and hail. The chart below illustrates the causes of agricultural losses in Vermont due to weather events since crop insurance was first available to Vermont farmers and growers in 1990.

In 2016, crop insurance protected $27 million of liability on growing crops in Vermont. There were 73,000 acres insured and more than $880,000 was paid to farmers in indemnities for production and/or revenue losses.

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Causes of Agricultural Losses in Vermont from 1990 until 2016, Source: Mary Staak, USDA RMA

Do you need crop insurance? The best way to determine your need for crop insurance coverage is to assess your level of risk, working with a USDA-licensed insurance agent. To find an agent, visit your local FSA office or go to Risk Management Agency’s agent locator.

Without a strong crop insurance program, uncontrollable weather events can undermine the financial security of individual farmers and could potentially place an enterprise or even an entire agricultural sector in jeopardy. And the business and financial impact of agriculture is important to Vermont’s economy. In 2015 Vermont’s agriculture industry contributed more than $940 million to the state’s economy.

Buying a crop insurance policy is a risk management tool available to Vermont farmers. Producers should consider how a policy will work with their other risk management strategies to insure the best possible outcome each crop year. Crop insurance agents and other agri-business specialists can assist farmers in developing good risk management plans for their unique agricultural enterprises.

USDA is an equal opportunity provider and employer.

Logo-USDA 2015

Posted in Financial Mgmt, Goals, Insurance, Resources for Beginning Farmers, risk management

Second Career Farmers Reveal Secrets

On average, people change careers three times in their lifetimes, and that’s not counting about ten different jobs across those careers. Whether through choice or circumstance, people are on the move to different employment opportunities, and it’s not surprising to find a number of people starting out in farming after abandoning a completely different career path. Do these new older farmers have a head start based on prior work experience?Or, do they have lots of catching up to do having spent no time on a farm and too much time in an office?

We posed these questions to several second career farmers and also asked what advice they’d give to those starting out farming later in life.

Jon Turner on farm

Jon on his farm, Wild Roots

Jon Turner started out in the military and as a marine served three tours of duty. Returning home, he first found solace and meaning in writing and then turned to farming which he describes as “more of a way of life rather than a career.”

What skills and experience from the military did Jon find helpful for his new life in farming?

A good farmer has a healthy relationship with their land and is capable of recognizing patterns both good and bad. Being in the military forced me to develop an understanding of situational awareness and attention to detail.  As a marine in combat, these two factors could save a life and are entirely translatable in the agricultural field. To be adaptable to change while knowing how to navigate difficult circumstances – a concept first introduced to me in boot camp 14 years ago – is everything we as farmers, as land stewards are currently being confronted by.

As Jon describes the challenges of farming on his farm, Wild Roots Farm, “Anyone can take a seed and place it into the ground. What happens afterwards will determine whether you eat a nourishing meal or not.  Our first garden put me on a path to understand living systems, their relationship to each other, and our relationship with them.  My desire to learn how to read the landscape and how its patterns would influence the design process followed a few years later.”

Yves Gonnet, owner of Midnight Goat Farm found himself on a different battleground. As Yves explains, “My decision to farm was by choice as a result of circumstances – my renewed sense of mortality after a bout with blindness and the new found question, ‘If not now when?’ ” Farming provided “the physical exercise of manual labor, the mental exercise of constant challenge, the depth of life and death activities, and the satisfaction of growing something delicious.”

Yves3

Yves on his farm, Midnight Goat

From a career in technology and software in the 1980s, Yves brought a number of transferable skills to farming including troubleshooting, creativity, patience, inventory management, marketing, sales, customer service, accounting, procurement, vendor relations, cash management, and knowing how to learn.

As an IT entrepreneur, Yves knew how to transform and grow businesses, “it was an amazing time moving from paper to machines.”  In farming, he’s finding the skills and knowledge he needs keeps growing including:

Yves1

Yves and a kid goat, Midnight Farm

  • How to save a life;
  • Read the weather;
  • How to grow and harvest plants;
  • Curing, fertilizing, and packaging;
  • Building with available materials;
  • Electrical work, and plumbing; and,
  • Regulatory compliance.

Terry Marron would have started her first career in farming if the conditions had been different in the 1980s. Having studied animal science in college, the career she’d imagined wasn’t there upon graduation.  “In 1983 it was either big dairy or you didn’t farm; there were no niche farms,” she says. Terry found a career with the US Postal Service, which provided job security and full-time employment. After a 20-years, she was ready for change. Brushing up on her college accounting, and building on her gardening hobby, Terry discovered that her people skills from working with the public and customers prepared her well for going out to talk to local food buyers and pitching her farm product. In addition, as a postmaster, she’d been accountable for large sums of money, balancing sums daily with a computer program so moving onto Quickbooks for her farm, Windstone Farm, was a smooth transition.

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Terry’s Windstone Farm

All three farmers have made good use of the variety of programs offered by the network of agricultural agencies and service provider organizations in Vermont. In developing the Vermont Chapter of the Farmer Veteran Coalition, Jon learned about specific programs and resources by meeting with people at state and federal organizations including the USDA, FSA and NRCSNOFA-VT, the Vermont Agency of Agriculture, Food & Markets (VAAFM), UVM Extension Center of Sustainable Agriculture, among others. Terry availed herself of UVM Extension’s Women in Agriculture Network (WAgN) and New Farmer program and also tapped into UVM Ext. listservs such as Veg & Berry News to build up her skills and knowledge. Starting a small goat dairy in 2012, Yves has relied on the Dairy section of VAAFM and workshops at NOFA and is now finding the listening to his customers, vendors, other farmers, and employees are teaching him the most. Jon has a favorite book – Gaia’s Garden by Toby Hemingway, his go-to guide for permaculture and regenerative agriculture.

Terry under tractor.png

Terry hones her tractor skills

Since making a shift to farming, Terry, Jon, and Yves find their lives evolving. Yves was focused on business building and lifestyle and today’s he’s leaning towards self-sufficiency, sustainability and community building. Terry has recently re-evaluated the long hours she devotes to farming.

Like many jobs working at the Post Office was 9 to 5, “I closed the door, it was gone. With farming, you’re living in it, any downtime that you have it’s so easy to go out and before you know it, it’s 9 pm.” If your partner isn’t in farming, this can affect personal relationships. For me, it’s important to set up some boundaries so your partner doesn’t resent your business.”

Here are some words of wisdom which Terry, Jon, and Yves pass on for people considering a change to farming:

  • Plan as well as you can, and prepare to learn the most you can from failures.
  • Don’t be shy to ask for help.
  • Make the most of naps.  If you forgot how to nap, relearn it.
  • Don’t take on too much at once: there is a lot to learn and you need the time to absorb.
  • Find farmers — experts and old-timers — to speak with.
  • Try to learn from other people’s experience whenever possible.
  • Be safe.  There are really no sick days.
  • Work on someone else’s farm for one or two years.
  • Don’t try to do it alone.
  • Set boundaries for personal time.
  • If you don’t like doing a task (e.g. payroll), hire it out.
  • Have the numbers – farm viability is crucial
  • Work smart not hard.
  • Sing while you work.

Jon adds that for those who suffer from Post Traumatic Stress, traumatic brain injuries (TBI) or other physical disabilities, farming is one of the most valuable solutions for re-integration.  “Farming has provided meaning, worth, value and community, all things that we had in the military and lost once getting out,” he says.

Beyond “how-to” practical and farming preparation skills, some eureka moments have come from posing existential questions – many of us ask ourselves these questions at some point in our lives. But before plunging into farming, these questions can take on particular significance:

  • What do you I enjoy the most?
  • What do I need to know – or don’t I need to know?
  • How much can I manage and how much do I need to control?
  • Where do I want to go?
  • What’s important?

In listening to Terry, Jon, and Yves, it’s clear that they’ve thought about such questions. In their own words:

We are never bored and almost always working on useful satisfying tasks. What we do is real work, which feels great. I used to work 80-100 hour weeks with little time off, now I just live.

I want to stay connected with growing.

As difficult as farming can be, there is nothing more rewarding than knowing that you are taking every effort to feed your family and community.

Posted in Farm labor and human resources, Goals, Quality of Life, Resources for Beginning Farmers, Scaling up, Uncategorized | Tagged , , , , , , , ,