duncan family farms · 2016-07-22 · require higher-than-average labor hours to achieve the same...

TAKING CARE OF THE LAND. TAKING CARE OF PEOPLE.

DUNCAN FAMILY FARMS

Field of Spring Mix

Current Acreage – 6002 Ground AcresGoodyear – 2500 Nipomo – 163 Cuyama – 1079 Imperial Valley - 2260

Production, Distribution and Marketing of Local / Regional Foods

Local / Regional Foods

Food that is distributed directly to the consumers or through “short supply chains”

• Short distances between production and consumption

• Few, if any, intermediary actors between producers and consumers

• Farmers’ Markets, CSA’s, Regional Food Hubs

• Local food supply systems with short supply chains enable the preservation of farm identities and relationships, as well as the preservation of product value between farms and consumers.

Two Types of markets

Direct Markets

• Direct Markets – exchanges of food from farmers or producers directly to end consumers or to institutional buyers

• Small Farms are concentrated here

(Farmers’ Markets, CSA’s, Agritourism, Direct to Institution-Farm to School, Farm to Hospital)

Types of Markets

Intermediated Markets

• Involve additional parties –the intermediaries –including grocery stores, restaurants and regional distribution outlets.

• These markets are dominated by larger farms.

Growth Trends

• Direct markets have grown significantly in the past

6-8 years.

• Growth is seen in quantity of existing markets, the volume of sales, and the levels of farmer participation.

• This growth in DM’s for local food represents an important market opportunity for local food producers, especially for small-scale farmers.

Heirloom Beets

Benefits of DM Channels

• Direct Market Channels are especially important for small scale farmers.

• Offers an accessible market in the face of low farm gate prices (prices before supply chain entry).

• DM’s do not require the preferred high volume preferences of wholesale purchasers.

Prices and Market Power

• Producers tend to earn a greater share of retail prices in DM’s and Intermediated Markets than in traditional markets.

• Producers can be price makers instead of price takers.

• Wholesale marketing channels enable selling a higher volume of produce but at reduced prices relative to farmers market sales.

• Farmers market operations require higher-than-average labor hours to achieve the same levels of sales as CSA’s and wholesale distribution channels.

• CSA’s are generally the most optimal, producing the most efficient outcomes in volume, unit profits, labor input and risk preferences.

• Most successful approach is when farmers use mixed marketing strategies.

• Ultimately, individual characteristics of the farm operation – including size, costs, market access, level of marketing skills and other factors – will determine the ideal market outlet.

CONSUMER PREFERENCES

Household Consumers

• Freshness and the quality of product

• Price is also important –more important for general household consumers than for direct market household consumers

Institutional Consumers

• Support of local producers and the local economy

• Procure more fresh, healthy and high-quality foods

Barriers for Institutional Consumers

• Supply is not consistent or sufficient

• Lack of year round availability

• Unreliable product delivery

• Food Safety

• Lack of appropriate facilities and staff training for preparation of whole foods

• High price

Salanova Lettuce

Effects of Farm Size

• In 2010, the national midpoint acreage for produce farms that sell to local markets was 168 acres.

• Farms that sell to local markets account for less than 5% of the nation’s total cropland.

• Annual sales below $50K – however these farms only account for 11% of total local food sales

Small Scale

Effects of Farm Size

• In 2010, the national midpoint acreage for produce farms that sell to intermediated markets was 675 acres.

• Annual Gross Sales of $250K or more and distribute through intermediated markets represent only 5% of all farms producing local foods, but they account for 70% of local food sales.

Large Scale

Challenges to Expansion

• A continuing struggle to produce sufficient product volumes to meet demand.

• Accessing and maintaining a local customer base.

• Labor/Resource Constraints

• Regulations and certification requirements make it difficult to scale up.

FOOD HUBS

Food Hubs are a business or organization that actively manages the aggregation, distribution and marketing of source identified food products primarily from local and regional producers to strengthen their ability to satisfy wholesale, retail, and institutional demand.

Food Hubs make it possible for producers to gain entry into new and additional markets.

Going Forward and the Future

• Imbalanced markets, where demand exceeds supply, is found throughout the US.

• Economic Theory suggests that excessive demand will drive up prices-drawing more supply and more suppliers to the market, thus eventually driving prices back down.

• Some research suggests that more commercial, less “local” producers will step forward to address these market openings.

Farming in the future will need to be a combination of all shapes,

sizes and practices.