Commercial Horticultural Field Specialist
Iowa State University Extension and Outreach
The local foods industry in Iowa is maturing and as expected, farmers have many new marketing opportunities. There are now many options in addition to farmers markets for selling produce. Farmers markets are, and will continue to be, great outlets for locally grown produce. They create personal connections between farmer and the community. They also allow farmers to extract the greatest price per unit for their produce. However, farmers markets are not without their challenges or considerations. They are very sensitive to weather conditions, time of year, holidays, other events in the area, and require a diverse array of vendors to be successful. They also require significant time spent by the farmer at the markets.
Some farms prefer to bring the customer to the farm and in the right situation, can be a fantastic sales outlet. On-farm sales have the advantage of retail pricing like farmers markets but have the added benefits of not traveling or sitting at a market, maintaining a cold chain for longer shelf life, and are less influenced by inclement weather. An on-farm sales marketing strategy works best when the farm is located close to a metropolitan area, on a paved road, and looks clean and inviting to potential customers. The farmer should also be engaged with the community through social media (and other media) to communicate with customers about product availability. On-farm sales are often paired with other local goods such as jams and jellies, artwork, flowers, wine, or other items with a local flair.
Like any other market, on-farm sales have their own set of challenges. Customers are coming to your property and thus the property should be clean, inviting, and have bathroom and hand washing facilities. In addition, you must have adequate insurance coverage and the grounds must be well maintained to prevent slips and falls and to keep wayward guest from entering your fields or packing facilities. With on-farm sales, the farmer must be “always on” or presentable and friendly with customers.
Below: On-Farm stand. Photo courtesy of Harvestville Farm. Donnellson, IA.
Produce auctions have been around since the beginning of the recent local foods boom in Iowa. They are a stark contrast to farmers markets. Produce is sold in large lots to individuals who will resell the produce to consumers. Prices fluctuate greatly depending on market availability and buyer presence. Price one week is not the same price the next week or even later into the auction the same day. Quality, uniformity, packaging, and continuous presence are extremely important in this market. A deficiency in any of these will impact price during peak harvest season. For instance, single use packaging should be used (and is often available through the auction house) and products such as tomatoes, peppers, and cucumbers should be graded according to size and quality. Remember that many of these sales are going to grocery stores and the product needs to be representative of expected grocery store quality.
Produce auctions have two distinct advantages. 1) they do not require significant marketing time by the farmer. The farmer simply brings their product to the market. 2) if a farmer doesn’t have enough volume to meet a buyers demand, the buyer can purchase from multiple farmers to meet their need.
Below: Cedar Valley Produce Auction. Elma, IA.
In some cases, it may make sense to bypass the produce auction and sell directly to the grocery store. It is exponentially more difficult to get started in this market than produce auctions. Getting into a grocery store takes development of a personal relationship with the produce buyer, professionalism, and product consistency. Often, a store’s produce buyer is hesitant to start a new relationship or give up shelf space to an unproven farmer. A farmer should use their network to solicit references when developing relationships with new produce buyers. Once a relationship is established, price, volume, and delivery times can all be agreed upon prior to the start of the season. Remember when establishing pricing, to account for prices of boxes and delivery costs such as fuel and time. Like any other market outlet, there are still fluctuations within the market that will dictate product demand, which will ebb and flow similarly to demand seen at farmers markets.
As with any real estate, it is all about location, location, location. Both in the sense of store location where population dictates demand but also product location within the store. Product as part of a local food display will sell much faster than product buried in a corner or placed on a shelf with similar other products. To some customers, a shelf of three differently sourced tomatoes is just a line of tomatoes and the customer will buy whatever is cheapest, prettiest, or wherever they can get their cart to on a busy Saturday afternoon. To maximize your sales, find a way to differentiate your product from other vendors. That may be a sign or picture above your produce highlighting it to buyers or working with the store to get it located at the front of the produce section. Consider working with your stores produce buyer to create a local food display at the front of the store. If the store is buying product from multiple vendors, your product can be one of many. If not, you may need to grow several products in order to create that display for the store.
Keep in mind that not all crops may be profitable for you in this market. For instance, handpicked green beans are very labor intensive yet the price stores, and ultimately consumers, are willing to pay may not justify the price. However, mechanical green bean harvesters significantly reduce the labor and increase the volume sold thereby providing better margins.
Locally owned restaurants are another great market outlet. Similar to grocery stores, it is exponentially more difficult to get into this market than produce auctions or farmers markets. Getting into a restaurant takes development of a personal relationship with the chef, professionalism, and product consistency. The advantage to restaurants is that they require lower volumes than grocery stores, typically will pay better than grocery store prices (and sometime near retail prices) for a broad array of crops. They are often more flexible on product availability due to seasonality and are interested in purchasing a broad array of products from a single farmer.
Other Wholesale Outlets
Over the last several years, Iowa has seen a surge of other wholesale market outlets. There are now several local food cooperatives that are very easy to sell through. The state is also seeing a rise in local food wholesale distributors. These outlets share many similarities with produce auctions with a few exceptions. Price and volume are established prior to start of the season and require or are moving towards requiring Good Agriculture Practices (GAPs) certification. Each of these individual markets have their own operating procedures and quarks to navigate to be successful.
Remember that no one market is right for everyone. Each consumer has preferences for where they prefer to purchase their produce from and each type of market is needed to meet this demand.