The reality for many small farmers is that direct marketing what they raise and grow on their farms is the only way they can see to achieve the margins they need to support themselves and their dreams.
“For entry farmers or those who are smaller, they don’t have the economy of scale to rely on as their primary economic model, so they have to achieve higher margins for their products which basically means going directly to the consumer,” says Phil Veldhuis, president of Direct Farm Manitoba.
Veldhuis, who has a honey farm at Starbuck, Man., has been direct marketing for over 40 years, and also taught a course about adding value for farms at the University of Manitoba’s School of Agriculture.
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So, how popular is direct marketing. It may be much more than many conventional farmers think. Statistics Canada data shows that there are around 800 farms in Manitoba alone that are deriving some of their income from direct marketing to consumers, and Veldhuis estimates that direct marketing is the prime enterprise for roughly a third to a half of them.
There are all kinds of direct marketing models that farmers use to reach their customers, from a sign at the end of their lane, farmers markets and U-picks, to online and physical stores offering on-farm pickup or delivery options. The model a farmer chooses depends on many factors: how far they are from a large, urban market, the type of products they offer, their capacity to dedicate time and effort to marketing — whether that’s in the office updating their website or driving to attend a market.
“A lot of farmers tend to try a bit of everything which is absolutely exhausting,” Veldhuis says. “I encourage farmers who are thinking about direct marketing to think about what model they’d want to commit to, what suits their crop and what they have the skill set for. Online sales seem easy until you realize how diligently you have to respond to emails and keep track of your inventory, which for something like fresh produce is very difficult.”
It’s important to keep the ultimate goal in sight, Veldhuis adds, which is to take advantage of a higher price that the customer is comfortable with, without having a percentage taken by a wholesaler or retailer, which in some cases could be as much as 50 percent.
Don’t price yourself out of the market
Since the pandemic, everyone knows that prices in the grocery store have jumped, which means there is more margin to be had without having to ask consumers to pay significantly more than they would at their local big chain store. Because there is a limit to how much people will (or can) spend for a farm-direct product, even for urban consumers.
“People who live in cities are surrounded by large organizations that are efficient at delivering food and other things that those people want,” Veldhuis says. “If you, as a farmer, think that you can just walk up to an urban person and say I’m organic or I’m regenerative and that person will throw their dollars at you, that is not true.
”The typical urban person is just as careful with their dollars as anybody else and chooses to express their values with just as much restraint as anyone else. So, if you’re going to market yourself on how great your farm is, the best you can get is a few percentage points more than what that same product would be at the local grocery store.”
Costs have also risen, including labour, which squeezes margins for smaller farms, where labour comprises a larger percentage of the value of their products.
“The labour supply is very tight right now, and when a young person can get minimum wage at a golf course riding the lawn mower all day, if you’re expecting them to work hard in the sun doing lots of different tasks, you have to pay them well,” Veldhuis says, adding there is still a positive story in there that needs more press. “That labour provides local value for your community and the province. The consumer needs to know that when they buy my honey, they’re helping put a bunch of kids through college because that’s who I employ to harvest my crop.”
Another big problem, especially across the Prairies, is a lack of infrastructure such as local meat processing capacity or food development facilities that can help farmers develop or scale up their food products. Direct Farm Manitoba is working with government to increase options for livestock processing and farmers market sales.
Be prepared for a lot more work
“With direct-to-consumer products, there are many different roles,” says Kendall Ballantine, who with husband, Jay, owns and operates Central Park Farms at Langley, B.C., and founded Marketing for Farmers, an online business providing advice for farmers about how to direct market to consumers. “Today’s farmers need to be web experts, and marketing experts, and it adds extra work hours.”
From their 160-acre, off-grid ranch in Rock Creek, B.C., and a 40-acre leased farm in Langley, they sell and deliver everything they produce on their farm direct to customers. They started out raising non-GMO fed, free-range chicken, pasture-raised pork, and eggs, and later added 21-day dry aged, grass-fed Black Angus beef.
Ballantine started Marketing for Farmers during the COVID-19 pandemic when a lot of direct marketers who had relied on farmers markets or restaurants for their sales, suddenly had to find other channels to sell their product.
“They suddenly didn’t have those options anymore, so I started pumping out information about how to do an online store, and handle inventory and do an email newsletter to communicate with customers, because we already had those sales channels up,” she says.
Creating value
The success of any direct marketing venture, whatever channels a farmer decides to use, obviously starts with offering a good product that tastes great, but it can still be a tough sell as buying direct from a farmer is usually not the cheapest or most convenient choice. The difference, the thing that makes someone willing to keep coming back to the market or the farm, and pay a little more, is the relationship they build with the people who are growing their food.
“It’s a balance between trying to build relationships and also understanding that customers want convenience,” Ballantine says. “We are seeing more producers, like us, who do home delivery, and some are coming up with subscription models, or attending farmers markets or different retail sales channels that are taking out some of that inconvenience that people associate with supporting local, but they are really starting to learn a lot of the techniques that previously only big box retailers had.”
The effects of COVID-19 were a mixed bag for many direct marketing farmers, but for many consumers it changed their buying behaviours and made them more aware and concerned about where their food was coming from.
“One thing we saw was that suddenly an older generation was more comfortable with buying food online,” Ballantine says. “And our business model has always been to tell our story and what we are about, so we keep a lot of the customer base that came to us during that time. We were really able to market to the fact that knowing and supporting your farmers is the safeguard that you have if something else happens down the road, and having a relationship with your farmer directly puts your family in a good spot for food security.”
So, while marketing requires a lot of time and effort, it’s also not free and producers should make sure they have budgeted for their marketing costs, such as fuel to make deliveries, transactional costs for card payments, social media boosting or website fees.
“If you are going to sell the same product for the same price as it is in Sobeys, you need to be able to take 10 per cent off that price as a marketing cost and still be profitable,” Veldhuis says. “And you have to make marketing a part of your day because if it’s like an extra chore that you do when you have time, your farm is not going to succeed with that model.”
Develop a strategy
Farmers have to develop a sales strategy that works for them, and it can change over time, but they do need a strategy, Ballantine says.
“Just because we grow it doesn’t mean people will come, and they need to decide if they want to take time away from the farm to set up and sell in person at a farmers market, or do they want to start sharing their story through social media, and sometimes it’s a combination of both,” she says. “We leaned heavily into farmers markets at the beginning because it had a built-in customer base, and although it was hard to take that much time away from the farm, we were able to build strong enough relationships that we could get that time back by leaving the markets, and now we do everything directly from the farm.”
Ballantine also believes that there is strength in collaborating with other direct-to-consumer farmers.
“There is always going to be room for all of us,” she says. “I have never viewed other farmers as competition, I have always viewed them as colleagues. If we, as direct-to-consumer producers, can work together, our voice will be a lot louder, and we are seeing some cool things with people offering subscription models and deliveries as a collective.”
Opportunities in direct marketing
While there are challenges to marketing farm products direct to consumers, there are also opportunities, especially as the demographics of the population are shifting. Newcomers to Canada come from many different countries and have different dietary preferences that small farms are well positioned to serve.
“There are plants and animals that they are looking for that aren’t represented in the major chain grocery stores such as goat, lamb and edible beans,” Veldhuis says. “Building a connection to new Canadians is where I see a bright opportunity, and many of them are people who have first-generational experience of getting food directly from farms.”
Finding out how to start
At Cartwright, Troy Strozek and Michelle Schram have found a number of different resources and people in the direct marketing arena that have helped them build their farm and networks over the years, helping them gain valuable business insights and marketing advice.
“We have friends that are also direct marketing and we try to collaborate with other farms when we can,” Schram says. “I also did an online accelerator program called MyDigitalFarmer and spent almost a year connecting with a network of farmers, mostly female, who were doing the marketing for their farm businesses, and they were from all across North America. We got to dig deep into improving our skills together and the conversations amongst us were very productive.”
Strozek, meanwhile, says both holistic management training and the book Redefining Rich by Shannon Hayes (see resources) have helped give them a model for developing business goals that align with larger family and personal values.
Down the road, Troy Schott and Rheagan Stewart’s advice for others thinking about direct marketing is to get a feel for how it works by talking with others who are already doing it.
“I did a lot of that to get ideas from other farmers that have been doing it for longer than me,” Schott says. “Going in blind is tough, so maybe go work on one of those farms for a while… Learning by doing is definitely key.”
Another tip is to make it as easy and convenient as possible for customers, a key strategy for their planned meals service.
“In many families, both parents work, and they are busy running their kids around, and they don’t have time to make a home-cooked meal,” Schott says. “There’s a lot of opportunity for people to have nutritious meals set up ready to go from a source that they trust because they have been to the farm and see what we are doing.”
Resources to learn more about direct marketing:
Direct Farm Manitoba
Has resources and an annual conference in February.
MyDigitalFarmer – Corinna Bench
Farm Marketing Accelerator Group Coaching Program
Kendall Ballantine, British Columbia – Marketing for Farmers
Cornell University – Small Farms Program
Includes many free resources including marketing guides for small farms.
Book: Shannon Hayes — Redefining Rich: Achieving True Wealth with Small Business, Side Hustles, and Smart Living, published by BenBella Books.
