Developing a Roadside Farm Market

by Michelle Kowalewski, Extension Educator, Susquehanna Co.

Thinking of growing and selling your own product?  A roadside farm market can be a great outlet to sell products directly to consumers.  Retailing directly to consumers can be a viable alternative marketing strategy and means of increasing profits for any small-scale ventures.  However, marketing through a roadside market needs careful planning and thorough examination of a wide range of topics.

First, as with any business venture, it's important to research! Explore potential competition, customers, and products.  What will make your roadside market different from another and what will entice people to stop and buy your products?  The increasing trend to buy local products is certainly in your favor if you can make a great first impression and encourage customers to stop again.  What products will you grow to sell at your market?  What is your expertise and how does it match up with what your target customers want?  Remember, quality is important to consumers and will be one of the main reasons that they continue to shop at your stand.  Develop a plan, including production schedule of what items might be in season, when, and for how long.  An option if you cannot produce all the items you wish to sell, is to consider supplementing your market with offerings from other local growers.

It's always important to check on regulations.  There are many regulations to operating a small business and a roadside stand is no exception.  Check with local municipalities or officials to check on zoning in your area or township.  Location is a key consideration for a roadside market.  Spend time observing traffic flows in the vicinity of your potential site.  And remember, signage is important.  No matter how nice your market looks, people must be able to find it, so use directional signs to help customers locate your business.  Signs must be eye-catching and easy to read from a distance.  It's less important to list all the products available on the sign than to direct customers to the market.  When people arrive at your market it's important for parking to be easily accessible and safe.  See this past blog on signage for more.

Now that you have customers to your market, remember to keep your displays attractive.  Shoppers like to see displays of fresh vegetables in a high quality, clean environment.  Remember, a positive first impression will keep shoppers coming back for the next visit!  Roadside markets are often selling an image and experience as well as physical products.  Help your customers think about traditions and warm thoughts - old crates, tools, scales, or simply photos can help create a "moment" for the shopper that makes them feel connected.  It's all about selling your story and your products!

A simple, yet attractive, display on something like this old time sleigh,
can trigger warm, nostalgic feelings in customers, bringing them back.

Customer service is important - be sure to listen to your customers as well as educate them about the products that you are producing.  Be friendly and courteous and always handle complaints in a professional manner.

There are a lot of other key factors to consider when developing a roadside market:

• Size - are you building a new structure or remodeling an existing structure? Do you ever envision expanding?
• How will you price your products?  
• Do you need to consider advertising?  
• How will you staff your market?  
• What type of records should you keep?  

To learn more about developing a roadside market, read Penn State Extension's Ag Alternatives fact sheet on Developing a Roadside Farm Market.

How's the Produce Competition Doing?

by John Berry, Extension Educator in Lehigh Co.

U.S. consumers have benefited from an increasing volume and variety of fresh produce at both retail and food service outlets.  There has been a significant accompanying growth in imports, particularly since the 1990's.  The produce section in today's grocery store often has dozens, if not hundreds, of different fresh fruits and vegetables on display all year around.  This product typically comes from all corners of the globe as additions to our domestic fresh fruit and vegetables.  Improved logistics, technology, and transportation have allowed this increase in availability.

Did you know nearly two-thirds of our fresh produce imports from from Mexico, Chile, and Costa Rica? Additionally, California, taking advantage of its diverse geography and climates, is the nation's largest fresh-market producer.  The State is the nation's leading producer of fresh-market grapes, strawberries, peaches, and a major producer of a wide variety of fresh vegetables and greens.

What does all this have to do with me as a local produce farmer?  As we continue to finalize 2013 and develop a growing and marketing plan for 2014 - we may wonder how the upcoming season will treat us compared to previous years.  Could there be any impact from this produce typically coming from outside our local area?

Precipitation is forecast to be in short supply in 2014.

A recent Wall Street Journal article noted that, "Record-low precipitation in 2013 has worsened California's drought, draining reservoirs, forcing farmers to keep fallow thousands of acres of fields and leaving some ski resorts high and dry during the busy holiday season.  Urban and agricultural customers, including Southern California's huge Metropolitan Water District, have been told by the state to expect to receive this year, on average, just 5% of the water they historically request, after a year in which rainfall totals hit record lows in many parts of the state.  Last year, customers received 35% of requested supply, on average."  Additionally, checking NOAA drought monitor data, we see most of Mexico and much of South America are currently rated at "dry" or "drought" status also.

As our customers expand concern for healthful foods and build increased awareness of local farm-food sources we may expect another strong demand year in 2014.  Local distribution is also seeing some growth.  Not only are there examples of local food distribution systems starting to mature, the many established food brokers are carrying more and more local produce as their conventional customers demand.

Of course, no one can predict the future - but - if growing conditions in the southeast U.S. and South America are not ideal, perhaps east coast growers will be able to fill more of the expanded regional demand for fresh produce in 2014.  Will we be prepared?

Remember to consider participating in the 2014 Mid-Atlantic Fruit & Vegetable Convention January 28-30. There are many educational sessions appropriate for those of us in the commercial produce business.

* This article includes information from FTS-356-01; Economic Research Service/USDA

Joining a Food Cooperative

by Juliette Enfield, Extension Educator in Warren Co.

Have you been thinking of scaling up your farm enterprise or exploring new regional markets?  Think about what is holding you back.  Is it the long distances the drive, the increase in marketing efforts, or the access to capital for business expansion?  A cooperative may help you solve these issues.

Cooperatives are member created organizations that combine resources to meet common needs.  In the case of expansion into new food markets, the cooperative will invest in the equipment needed for large scale food distribution.  This would include a packing facility, a refrigerated delivery truck, and employees to make the deliveries, address customer relations, and market the foods that are produced by members of the cooperative.

Cooperatives sell to a variety of different customers including CSA members of the coop, grocery stores, and restaurants in the area.  As a member of the cooperative, your farm products will be purchased at a price set by the members and the cooperative.  The coop then resells your farm products at a higher price in order to recover costs needed to run the coop.

Combining products from multiple farms protects against crop failure by having multiple suppliers of one product, it allows for greater variety in a customer's food shopping basket, and it meets the high quantity and quality requirements for entry into larger markets.

Cooperatives allows farmers to offer a wide variety of products to their customers

Research your area to find out if there are cooperatives in your area.  Some cooperatives in Pennsylvania include the Tuscarora Organic Growers Cooperative, the Northwest Pennsylvania Growers Cooperative, the Clarion River Organics Cooperative, and the Penn's Corner Cooperative.  Each cooperative has its own membership requirements and geographical distribution network.  Contact the cooperative to find our what their membership fees are.

If there are no cooperatives in your area, you could start one.  Discuss the idea with other farmers in your area who would like to achieve similar goals.  Although the initial set up of a cooperative would be time consuming if there is not one in place, in the long term it could allow you to focus on growing and making value-added products instead of finding ways to market your farm, transport your farm products, and gain access to capital for expansion.

Steps for creating a cooperative include clearly defining a mission, electing a board of directors, conducting a feasibility study, drafting a business plan, establishing tax status, registering the business, and deciding on membership fees and purchasing prices.  The Keystone Development Center is a non-profit group that helps farmers develop cooperatives.

For additional business planning resources, see the Penn State Extension Agricultural Alternatives page.  There are publications on Cooperatives, Developing a Business Plan and conducting an Enterprise Budget Analysis.

Source: USDA, How to Start a Cooperative, Cooperative Information Report 45, Section 14. Revised April 2011.  Accessed January 14, 2014.

Multi-State University Project Aiming to Assist Stakeholders in Understanding Ethnic Greens and Herbs Marketing and Production Issues and Opportunities

U.S. Census data shows that the mainstream population only increased by 9.7% from 2000 to 2010 as compared to 43% for Asians and 43% for Hispanics (Census 2000, 2010).  With this increase in population, there certainly would be an increased demand for ethnic produce; hence, opportunities exist for producers, wholesalers, and retailers who focus on growing and selling ethnic greens and herbs to serve the needs of these clientele.

Spanish oregano

Ability to successfully provide ethnic consumers with greens and herbs they desire will depend on collaboration among different parts of the industry, from the farmer to the processer and marketer to the consumer, and also involve institutions of higher learning to provide science-based innovations and an educated workforce.

To facilitate this, a multi-disciplinary project has been implemented to analyze consumer demand for ethnic greens and herbs and production feasibility for select ethnic greens and herbs, and to host a one-day workshop during which researchers will share outcomes from ethnic greens and herbs production and marketing studies.

Funding provided by a USDA National Institute of Food and Agriculture, Specialty Crop Research Initiative grant is allowing researchers and Extension personnel from Rutgers-The State University of New Jersey, The Pennsylvania State University, University of Massachusetts, and University of Florida to host the March 3, 2014 workshop in Valley Forge, PA.

Where will the workshop be held? The all-day workshop will be held in Valley Forge, PA. 

What are the conference fees and other associated costs? Attendees will not be charged any fees to attend.  USDA National Institute of Food and Agriculture, Specialty Crop Research Initiative grant funds will cover attendees’ lodging for the night of March 2nd, based on double occupancy, meals during the conference on the 3rd, and materials/workshop attendance.

Who should attend?  Growers, wholesalers, retailers, and other stakeholders, Extension personnel, researchers, association representatives, and similar industry members who are involved in ethnic food production/sales and marketing/sourcing/education. 
 
To let us know that you want to be added to the invitation list, email Dana Ollendyke at: djm428@psu.edu 


The project is being funded by a USDA National Institute of Food and Agriculture, Specialty Crop Research Initiative grant, Project Award Number: SCRI 2009-51181-06035.  The goal of the Specialty Crop Research Initiative is to solve critical specialty crop agriculture issues and address priorities through multifunctional research and Extension. For more information about the program, visit http://www.csrees.usda.gov

Marketing "Sustainable Farming" to Consumers: A Research Review

A recent journal article by Hillary Sackett, Robert Shupp, and Glynn Tonsor includes results that may benefit some readers who are marketing products with a "sustainable" label.  I'll provide the short version here but you may be able to obtain a copy of the work from one of the authors.

Research Motivation & Background

Sustainable agriculture is often described as a farmer working to not only be profitable but also do no harm to the environment and the broader society.  This so-called "triple bottom line" is sometimes referred to as "Profit, People, Planet."  While many in the agriculture industry debate the term, sometimes strongly, it's clear that a segment of consumers make purchases based on their perceptions of sustainability and the practices that make a farm sustainable.  Food marketers need to understand these consumers in order to target promotional efforts accurately.

The researchers used an internet survey to gather feedback from 1,002 people in 2010.  There were two different versions of the survey; one for apples and one for beef.  For each, ten different characteristics of sustainability were defined.  These characteristics reflected 6 production practices, some of which were different between apples and beef.  (For example, one practice for beef was "prohibited use of antibiotics" and one practice for apples was "limited herbicide use.")  Using a method called "Best-Worst Scaling," the researchers repeatedly asked respondents to choose the most and least important options from a group that included six of the ten total characteristics.  By answering this type of question a number of times, with different groupings, the respondent's preferences become clear.

The researchers analyzed the data to determine the relative importance of each of these characteristics.  They did this first for the entire group of respondents and then they used a tool called "latent class cluster analysis" to group similar types of respondents.  The benefit of this type of tool is that the data naturally group themselves rather than the researchers providing their best judgment to group the respondents.  The researchers then explore the clusters to understand the factors that differentiate the clusters.  The results for both types of analysis are useful for marketers!

Primary Findings

Overall, the size of the farm was ranked significantly higher than any other characteristics for both apples and beef.  The factor related to "locally-grown" was ranked 2nd for beef and 4th for apples.  A full set of results is shown below.

Ranked preferences for measures of sustainability on apple and beef farms

The numbers in parentheses show the level of the preference among all respondents.  These can be compared against each other.  Therefore, small farms is nearly twice as important than the second option for both apples and beef.

The latent-class cluster analysis then provided four distinct groups of respondents for apples and five distinct groups for beef.  These are described below.

Apple Cluster Groups

1. Localvores - 14% of respondents fell into a grouping that heavily valued local production.  These also valued minimal herbicide use and preventive/cultural pest control.
2. Small Business Enthusiasts - 30% fell into a group that placed heavy value on farm size and financial stability of the farm.  These also valued several of the production practices roughly evenly.
3. Price-Savvy Shoppers - 10% were consistently most concerned with food prices.
4. Sustainably Indifferent - 46% placed roughly equal weight on the characteristics.  It is not possible to discern whether these respondents care little or greatly about these characteristics; only that they care roughly equally about them.

Beef Cluster Groups

1. Animal Rights Activists - 15% place a great amount of weight on animal safety and pasture-based feed.
2. Nutrition Buffs - 24% place a great deal of importance on limited antibiotic use, growth hormones, and pasture-based feed.
3. Price-Savvy Shoppers - 10% indicate that price is the leading concern.
4. Sustainably Indifferent - 41% fell into this group, as described above.
5. Say No to GMOs - 10% placed full weight on the prohibition of genetically modified livestock.

Putting These Results to Work

The results of this work provide a bit of insight for the food marketer.  Assuming the apple-related results are applicable to other fruits, or maybe produce in general, you can see that themes of "small farms," "Integrated Pest Management," "local," and other production-oriented descriptors could be used in your marketing and promotional materials/websites/social media outlets.  The same could be done for beef (and possibly other meats) based on the beef results.

The research also does a nice job of segmenting the markets.  Based on my readings, I suspect that most of those in the "Sustainably Indifferent" groups are not actively seeking sustainably-grown products.  Of course, the "Price-Savvy Shoppers" are also not in the target market.  Therefore, the article provides some insights into why the others are in the market for sustainably-produced foods.  For apples, some consumers are most interested in buying local.  Others want to support small businesses, whether local or not.  For beef, some are most concerned about animal rights or non-GMOs while others view sustainable products as more healthy.

Use these and other related phrases on your labels as well as your promotional materials.  It should help you connect more deeply with your customers as you hone in on what concerns them the most.  Good luck!

_______________________________________________________________________

"Consumer Perceptions of Sustainable Farming Practices: A Best-Worst Scenario." (2013) Agricultural and Resource Economics Review. 42(2) pp. 275-290.

How to Get Started with a Written Business Plan

by Lynn Kime, Senior Extension Associate

Business planning is an on-going practice that most agricultural businesses try to avoid. It takes time away from working in production of crops or livestock, which is what most producers enjoy. That is one reason you started farming, to work with your hands in the field or with your livestock. However, with the changing times, more producers are being asked for business plans, especially when applying for loans from your lender.

Business planning can be an eye-opening experience for most producers. It makes you realize that you are not an island in a large ocean. You will look at your industry from a several perspectives global, regional, local, and your own operation. The research you conduct to write the plan will enrich your view of your industry and your own operation.

When you think of writing a business plan, think of the process of preparing to take a family vacation. What steps do you take when planning the vacation? You get family consensus on where to go, decide on the travel method (auto, plane, bus, train), map the route or rely on your GPS unit, take the trip, and then you evaluate the enjoyment of the trip.  Was it an enjoyable vacation form the entire family? When planning your trip, you can use a vacation planner to do the work. Business planning is much the same as planning a vacation; you are providing a map of your business for the future.  You will complete the same steps as taking the trip. When developing a business plan, you can also hire someone to write the plan. However, it becomes their interpretation of the business, not yours.

Your business should be enjoyable for the entire family as all members are impacted by the business. All family members may not work within the operation but will be impacted by the business with the owner(s) being away from the family at times. During several times of the year; planting, harvesting, calving, or when livestock are having young, the owner(s) may not be home for very long. Are all family members on board for this?

When creating a written business plan, get input from all family members as the owner(s) may fall into the rut of doing things a certain way because they have always been done that way. Other members may see ways to better the business that you do not. Also, having a business team will assist in the alternative view of the business. This business team should consist of your accountant, attorney, insurance salesperson, and any trusted mentors you have.

When writing your business plan you will develop goals and objectives to accomplish those goals and research the past, present, and probable future of the industry. You will decide if your current business structure is appropriate for the present and future of the business and which structure will assist with the transition to the next generation. Your risk management plan should also be included within the plan. This assures the reader that you have considered what may go wrong and the steps you plan to take if they do.

The marketing plan is a very important section of the plan, even if you wholesale your production. It does not matter how well you produce anything if there is no market for your production.  Having a strong market for production is critical to any business. If you are retailing or direct marketing your production, who is your customer and do they want what you produce? Your market research will determine your first and best customer. Also if you are in the retail market, what are you planning to do with the percentage of production that is not the highest grade? Having a plan for your “seconds” is something to consider as not all production is fit for your best customer.

Another important section of the plan is to create the financial documents to support your plan and to evaluate the success of the business. Your financial documents should include a balance sheet, income statement, and cash flow statement. Your lender will closely review these statements when considering your loan application. These statements may be the most difficult to develop as you should construct several scenarios for each. Your actual statements may be provided by your accountant but you should try to project two to three years out if at all possible. You should also develop best and worst case scenarios. Again, this will show the reader you have considered several possibilities.

After the plan is constructed, you will write the executive summary section of the plan. This executive summary is what the lender reads first as you will use this section to determine if the business is viable and provide the supporting information. Most lenders will read the executive summary and review the financial documents to make their recommendation concerning the loan.

There are several places to learn more about business planning. The Agricultural Alternatives series contains a publication titled Agricultural Alternatives:Developing a Business Plan. Penn State Extension has a course this winter titled Your Future in Focus. The course will be offered via live webinars on Tuesday evenings beginning January 14, 2014 from 6:30 to 9:00 pm. There are also two face-to-face sessions included in the course.