Resource Guide for Vermont's New and Aspiring Farmers
Access to Markets and Marketing
By Mary Peabody,UVM Extension with Dennis Kauppila,UVM Extension
The key to any successful business is to get your product into the hands of enough customers who are willing to pay a price that returns a fair profit to you, the producer. There are many several different types of market outlets for selling agricultural products and each option has benefits and challenges that you need to consider. For many small farms direct marketing (selling your product directly to the customer) provides a way to increase profitability while developing valuable relationships with customers. However, direct marketing requires the development of some special skills and it does take time away from production.
If you are just starting out it may be all that you can manage (especially in the first years) just to focus on production and quality. In that case becoming a member in a marketing cooperative may be the right choice for you. This allows you to focus on honing your production and management skills while your coop staff takes care of finding customers and nurturing those relationships on your behalf.
Likewise if you plan to produce large quantities of product you may find that planting, growing, harvesting or herd management takes all of your time and there are no resources left for marketing. In that case a marketing cooperative or a wholesale operation may be the best solution.
However, if you truly want to produce products that bring people pleasure and satisfaction there is no substitute for direct marketing. Selling direct to consumers allows you to develop great communication skills, gets you immediate feedback from your customers, and provides you with insight into what additional products your customers might be looking to purchase. The bonus is that direct market outlets allow you to educate consumers regarding the challenges of producing high-quality agricultural products.
What is Marketing?
Marketing encompasses all the management tasks you are responsible for from the time you harvest your product to the time a customer consumes your product and makes the decision to buy it again. Like all management activities, marketing is intricately connected to every other process on the farm and once your business is up and running you will have precious little time to stop and consider individual activities. Your marketing plan is your opportunity to give some concentrated thought to what you sell, to whom, where, and for how much.
Some of the areas you’ll need to consider for your marketing plan include the following.
A Special Note about Marketing and Dairy Farming in Vermont
Farm gate milk prices are regulated by Federal Milk Marketing Orders. Most Vermont dairy farmers belong to a dairy marketing cooperative. Cooperatives are member-owned businesses which are governed by an elected Board of Directors. Day-to-day operations are managed by staff hired and overseen by the Board. Members wishing to join cooperatives must be approved by the Board and sign a contract. Members are also required to invest in the cooperative through cash payments (member equity). When the business is profitable the members (as owners) can either share the profits or agree to reinvest the profits back into the business. The two largest dairy coops in Vermont are St. Albans Cooperative Creamery and AgriMark (which includes the Cabot product line). Other active cooperatives in Vermont include Dairy Farmers of America (DFA), Dairylea, and National Farmers’ Organization (NFO).
If you choose not to belong to a dairy marketing cooperative, there are two other options available to you. You may choose to sell your milk to a private firm rather than belonging to a cooperative. Some of these private firms include Garelick, Crowley Foods, Monument Farms and Thomas Dairy. The Vermont Agency of Agriculture maintains current lists of all Cooperatives and private milk handlers licensed to do business in the state. [Note: Regardless of which marketing strategy you select, have a contract in place before you get started. Not all cooperatives, or all firms, operate in all parts of the state and sometimes companies are not in a position to take on new farms.]
Finally, there are some dairy farms that are processing and selling their own milk. They might be selling bottled milk, yogurt, cheese, ice cream or some other value-added product. Because of the high startup costs associated with processing milk, it is extremely important to do a thorough job on your market research before you make an investment.
A Special Note about Organic Dairy Farming in Vermont
Organic dairy farmers have the same basic market outlets as conventional producers. There are marketing cooperatives (i.e. CROPP) and there are private firms (i.e. Horizon), and there are organic producers selling/processing their own value-added products. The additional requirement for organic producers is that they must be certified by an entity approved to oversee organic production standards (i.e. NOFA-VT). See the Northeast Organic Farming Association of Vermont description in Section II for more information.
Where to Go for Help
A final consideration in selecting the right marketing strategy for your situation has to do with what you enjoy. Some farmers/growers really like the social aspect of direct marketing. They enjoy talking with customers and other growers on a regular basis. Other farmers are perfectly happy staying on the farm and are uncomfortable with the idea of “selling.” It pays to know yourself and be honest about which jobs you like best and which jobs you dread. The following are some resources to help you.
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