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Selling farm-direct to consumers

Small, direct-market farmers are building better business cases for their farms. But will business smarts be enough?

Selling farm-direct to consumers

Allison Fenske pulls a reluctant grey cat off her dining room table to make room for her jars of homemade pea-shoot pesto, pickled beets and spicy slices of jicama turnip.

She points to the turnips. “Jonathan says he always tells people you can eat them the way you’d eat an apple, and I was like, yeah right,” she says. “But sure enough, you can. They are really tasty and you could absolutely eat them raw.”

Born and raised in the city, Fenske works as a lawyer at the Public Interest Law Centre and lives on a tree-lined street in Winnipeg’s West End. But like many young, urban professionals, she is interested in knowing how her food is grown and who is producing it, even though she is employed far outside the agricultural world.

Jonathan is Jonathan Stevens — owner of Jonathan’s Farm and one of a growing number of small-scale producers in Manitoba and across the country who are building their businesses by selling directly to consumers like Fenske, rather than dealing with third parties, brokers or wholesalers.

Stevens is also, in the view of Charlie Touchette, part of a new generation of direct marketers who are often driven more by social and ecological ideals than economic outcomes.

Touchette, executive director of the North American Farmers’ Direct Marketing Association, says that when his organization was founded 30 years ago, most farmers who chose direct marketing were looking for an alternative to the slim profit margins in traditional farming. 

“The whole idea of farm-direct marketing or marketing directly to the consumer is born out of economic survival,” says Touchette. Even 10 or 15 years ago, direct marketing was primarily tied to slashing the high costs of machinery, labour and land associated with large-scale commodity farming.

“So farm-direct marketing or direct to the consumer marketing emerged as a way to capture more of the marketing dollar, not just the farm or agricultural dollar,” Touchette says. “And I think it’s fair to say that economic evaluation, the ability to successfully earn a living on the farm, is still what captures many farmers attention.”

But not always.

Touchette has been noticing a substantial shift within the younger generation of direct marketers over the last five or 10 years. New direct marketers tend to see the relationship between the farmer and the consumer as a starting point rather than a final destination, he says.

x photo: Chris Procaylo

They want to farm and they want to deal directly with customers who appreciate their labour of love. They want to connect with consumers who understand their love of growing produce or flowers, for instance, or starting up a brewery and growing their own grains and perhaps even their own hops, Touchette says.

As a philosophy, Touchette believes, it’s fine if it is also accompanied by a solid business plan — even if it ruffles the feathers of an older generation.

The problem is that many people now jumping onto the direct farm marketing bandwagon don’t have either a background in farming or a business plan, he says.

“What I am seeing as a trend in new entrant farms… is farm businesses that aren’t surviving after they get rolling in the strong numbers they did 20 or 30 years ago,” explains Touchette. “With this new philosophy, the outcomes are starting to look a little bit like the business model you see with new restaurants, where for every one business that is surviving five years, 10 or 12 of them have started but then weren’t able to maintain their business and closed.”

In many ways, Jonathan Stevens is that idealistic new entrant farmer, even if he has beaten the odds by not just surviving for six years, but thriving and growing.

“I actually grew up in the city, so I have no background in farming at all, it was just something I was really interested in,” he says. “Every time I went out to the country I could just feel that pull, and that idea of growing my own food was really appealing to me — doing that kind of work was something I was just drawn to.”

“So I took that interest in organic farming and small-scale farming and I went to Ontario where there is a lot of that and worked there for a summer, learning how it all worked, then I decided to give it a try myself,” he says, speaking while on the road near Selkirk, Man.

By his own admission he didn’t have a business plan when he launched, and even now he isn’t particularly formal in preparing for the year ahead. That said, economics have become more important to him as the business grows — he now budgets for four employees, buying seeds and compost, and paying down the mortgage on the 13-acre farm he purchased just north of Winnipeg last year.

In the long term he wants to expand and buy some machinery to lessen the burden of tasks like digging up garlic or potatoes. He would also like to take a vacation at some point, he says drily.

“I don’t really have a plan and I didn’t really think too much about the making money part of it when I started it, I just thought I would give it a try and see how it went and see what I made. It just felt like something I wanted to do,” Stevens explains. “The first year, it probably wasn’t a living wage… I lived a pretty simple life and there was just enough for me. The next year I grew and I think I hired one person.”

He attributes the success of Jonathan’s Farm to choosing the community-supported agriculture model or CSA, where customers buy a share or half-share in the farm before the growing season even begins, with the promise of fresh vegetables every week for as many as 18 weeks. Each full share costs the consumer $587. This year he sold over 300 shares and his goal is to eventually be able to provide for 500 shares, which would push his enterprise gross into the neighbourhood of $300,000.

But Stevens knows all too well that not everyone who tries their hand at market gardening succeeds.

“Whether they have a CSA, or just go through farmers markets, I’ve seen a lot of people start up and then after a few years realize they’re still not making any money and they’ve been working themselves really, really hard, and then they give it up,” he says. “I think there definitely is a knack to it, and I think you have to be in the right market for it.”

Across the country

How many Canadian producers engage in direct marketing?

It’s impossible to tell — at least for now.

Historically, neither Statistics Canada nor Agriculture and Agri-Food Canada have collected information on direct marketing. However, that’s about to change as the federal government recognizes the growing interest in the practice of direct marketing.

For the first time in its history, the Census of Agriculture posed a question to producers about direct marketing this spring. The results will be published May 10, 2017.

“As a new question there is no previous data upon which to base trend conclusions,” said a spokesperson with Statistics Canada. “As well, we will not be able to provide the revenues generated by those sales.”

x photo: Chris Procaylo

Some information can be gleaned from individual provinces and a federally commissioned survey conducted in 2007, which asked farmers if they sold any of their products directly to consumers. The now-dated results found that 25 per cent of Canadian farmers sold at least some of their output at the farm gate, a two per cent increase over a previous survey conducted in 2004.

The same survey found that Manitoba had the lowest number of farmers who used direct marketing, a mere 16 per cent compared to 53 per cent of farmers in British Columbia, 39 per cent in New Brunswick and 43 per cent in Nova Scotia. The survey also indicated that 72 per cent of farmers in Newfoundland and Labrador used direct marketing, but cautioned the results were based on a very small sample group in that province.

For Crystal Anderson-Baggs, a market development officer with the government of Newfoundland and Labrador’s forestry and agri-foods agency, that figure sounds a little low.

“I would think it’s probably a little bit higher, but that is an educated guess,” says Anderson-Baggs. She calls direct marketing “a very important tool, it’s the majority mechanism that our farmers use here in the province, given the size of the industry and the geography of the province. Most producers do avail themselves of direct marketing, whether it’s direct to the end-consumer, or the use of CSA, or direct to the culinary market.”

While few farms in Newfoundland are close to the capital St. John’s, smaller centres also favour directly marketed farm goods because they can provide a way to compensate for underdeveloped supply routes, says Anderson-Baggs. There is also a long-standing cultural basis for direct marketing throughout the Atlantic provinces.

“We have smaller farms and they are able to find suitable markets nearby, without having to necessarily depend on the St. John’s market,” says the development officer. “And buying things local is a part of our culture in terms of rural Newfoundland and Labrador.”

While no solid numbers could be found for direct marketers in Alberta, the Alberta Farm Fresh Producers Association says their membership has declined in recent years.

“It’s kind of a tough one to answer in terms of numbers, in a way,” says president Jason Andersen. “Our membership levels are down slightly and I think in general there are fewer growers out here. The thing is we are getting fewer new growers, a lot of the older growers are beginning to retire, but nobody is taking over — as far as the vegetable end of it goes.”

Population density plays a part in limiting the growth of direct marketing in Alberta as well, according to Anderson, co-owner of Kathy’s Greenhouse near Lloydminster.

“You’ve got a rural population and a lot of them are already doing their own gardens and everything else anyways, so it’s kind of pointless for someone else to come in and try and set up a direct marketing operation in some of these areas,” he says.

Geography also plays a role in Manitoba, which has the lowest levels of direct marketing in Canada. Phil Veldhuis, president of the freshly minted Direct Farm Marketing Association of Manitoba and a local apiarist, says it’s one of several factors influencing the ability of a farm business to sell directly to the consumer.

“We really only have one large urban centre and there are not that many farms clustered around it, compared to southern Ontario where there are a lot of large or larger urban centres that have farms close by, where they can access things like farmers markets,” says Veldhuis. “Another factor would be the climate. If you are in B.C. or Ontario there are apples and other fruits that we don’t have here, so there will be some types of farms that just can’t exist in our harsh climate.”

Anecdotally, however, he believes that direct marketing is growing in Manitoba, especially when it comes to community-supported agriculture.

Kalynn Spain would agree.

The founder of Small Farms Manitoba, which offers direct marketing tools to small farm businesses, she says she has seen the number of small farm businesses that rely on direct sales grow in recent years. But she is also worried that these farms won’t be able to keep up with consumer demand.

“Over the last two years I have really seen the demand for local food increase,” she says. “I think the awareness in Manitoba and beyond is growing… but when it comes to the sales and the livelihood of the farmers, that’s still quite slow to catch up. We’ve seen lot of new farmers starting up, which is quite exciting, but we also need those farmers to succeed, so just because we see farmers markets starting up or we see new farmers, it doesn’t mean that those are extremely successful.”

About the author

Field editor

Shannon VanRaes is a journalist and photojournalist for Country Guide.

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