As more farms like Jackknife Creek Cattle & Land find success with their direct-to-consumer ventures, many experts believe it’s a good time for others to do the same.
Food veteran Jo-Ann McArthur says Canada is ready and waiting.
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“Is it a good time? Absolutely,” she says.
McArthur, president of Toronto-based Nourish Food Marketing, says now is a good time to boost margins by cutting out the middleman.
And farmers can also capitalize on the boom in local, where the driver is because consumers see farmers as individuals with high integrity. “It’s all about food with the story and a real person behind it,” McArthur says.
With 14 per cent of Canadian farms selling directly to consumers in 2021, it’s still a minority, but the number is growing.
“We’ve definitely seen more,” says David Lazarenko, executive vice-president of ThinkShift marketing agency in Winnipeg. “When COVID hit and trust in the food supply went up, I think that it allowed us to start having those positive conversations again.”
But there’s another solid business reason too — the availability of e-commerce solutions to cheaply connect farms and their markets.
Says Lazarenko: “The world has really opened that up to anyone and everyone, without the risk associated with ‘am I going to get paid?’”
Getting started
Like any business, a direct-to-consumer operation requires planning based on a strong understanding of who you are and your value proposition. It needs an operations plan, too, and a sales and marketing strategy.
Strategic decisions are crucial. Farm-gate retail and farmer’s markets may work for your location, but selling through other retailers or just focusing on online sales with delivery services may be a better option.
Do think longer-term though, McArthur recommends. “Once you get enough customers… you may go to your local specialty stores,” she says. “And then eventually you can get into a chain if you’ve got enough volume for that.”
Be thorough with the marketing plan though. As more farms get into this space, the need for product differentiation grows, Lazarenko says. “The farmers that are really seeing the rewards of this are approaching it like a business — they’re establishing a brand, they’re differentiating their brand, they’re telling a story.”
McArthur also advises thinking carefully upfront about product pricing. Cost it out as if you were hiring paid employees to do all the work, she says.
“Once you set a selling price, it’s really hard to move it upwards a lot. … If your objective is to sell eventually at a retailer, you have to understand all the different pieces that are going to eat into your margins and price accordingly.”
Startup costs
Although an e-commerce website can cost as little as $1,000 to $5,000 if you do it yourself, experts recommend budgeting more like $20,000 to $25,000 for a professionally designed product plus branding and some initial paid marketing campaigns.
Provincial grants may help, and multi-generational farms may have younger, tech-inclined family members on hand to help.
Overall, though, your investment in this area should be a reflection of your estimated ROI.
“There’s no way you can get into this without some form of investment upfront,” Lazarenko says. “If you want this to be big, the investment is going to have be the same. You can’t put in a little and get a whole lot out.”
