It’s an article of faith these days that selling your farm products directly to the consumer is the only way to go. Ah, if it were only that simple!
The nice thing about selling direct is that face-to-face sales build trust and loyalty, provides direct feedback, and eliminates the middleman, allowing you to keep all the money. All well and good, but it’s awfully labor-intensive, especially if you live a long way from your customers. Farms, you have probably noticed, are way out in the country, and you’re a long way from your neighbors, let alone your customers.
We started with direct sales of free-range eggs at the farmer’s market, then added a couple of local supermarkets. A farmer’s market takes about seven hours, including travel time. To deliver to three local stores takes us about two hours. Each channel gets about half our output.
Obviously, it would be a lot easier to add a couple more stores than farmer’s markets, and stores are open year-round, while farmer’s markets aren’t.
Wholesale prices in our neck of the woods run about 2/3 to 3/4 of retail prices, so eggs that retail for $4.00 bring $2.67 – $3.00. Because it takes less time to stock a supermarket than attend a farmer’s market, selling to stores often give you a higher hourly return in spite of the lower prices.
I’ve never sold through distribution, but I knew a guy who did. He had 1,200 free-range hens and sold all his output to high-class restaurants in Portland, 90 minutes away. After a while, he signed up a distributor to handle his eggs, picking them up at the farm and delivering them to his customers. Because the distributor was already headed that way and already handled most of these accounts with their other products, they could do this very cheaply. Time-consuming trips to Portland were thus eliminated, freeing up time for farming and living.
The fact is that high-grade produce grown in small quantities simply doesn’t make it into big cities. It’s all snapped up by gourmets in the nearest large town. It doesn’t start spilling over into big cities until production exceeds what the closer towns can handle.
Of course, big cities are where most of the money is, so overcoming distribution issues is one path to higher profits. Distribution is nothing to sneeze at. Another possibility is direct sales via mail-order. This is a problem with eggs, since they’re fragile, but is practical with other products. The main issue is that the product needs to have a high value per pound (so shipping doesn’t dominate the costs) and be of extremely high quality, so gourmets will make it worth your while. And the gourmets have to find out that it exists, too, one way or another.