Improving Markets for Small and Mid-sized Organic Growers

Ron Strochlic

“Growing the Organic Market”

CCOF Conference

February 19, 2011

Background¨ Organic sales up 15-20% per year

– From $4 b in 1997 to $25 b in 2009¨ Organic historically considered a

promising marketing niche for small and medium growers – has not been entirely the case

¨ Marketing is a key factor constraining the success of small and medium organic farmers

Research Questions¨ What are the main marketing

challenges facing small and mid-size organic growers in California? – Grower and buyer perspectives

¨ What are policy & program recommendations to

improve marketing for these growers?

About the studyInterviews/survey with¨ 35 Farmers¨ 22 Buyers¨ 21 Key Informants¨ Survey - 103 farmers¨ 3 Farmer Group

Interviews¨ Focus on fruit and vegetable growers

Overall findings¨ Marketing is a

challenge!– For 80% of respondents– “Major problem” for

half• 42% had sold organic

product as conventional¨ Most report multiple marketing channels¨ Main channels

– Direct sales ~ 75% – Farmers markets ~

65%– Wholesale ~ 60%

Organic Marketing Challenges¨ Need to recoup higher production costs

¨ Growth of organic sector and loss of niche markets

¨ Certification costs and paperwork burden¨ Competing attributes - “local,” “sustainable”

and “no-spray.” ¨ Consumer concerns regarding safety of

organic products¨ Limited access to organic price information¨ Limited university research and outreach for

organic production and marketing¨ Low demand for organic products in certain

regions¨ Other challenges are similar to those of all

small farmers

Main Marketing Challenges Cited by

Farmers¨ Volume (too much or too little):

84%¨ Lack of price premiums: 66%¨ Accessing markets: 65%¨ Competition: 55%¨ Price information: 47%¨ Meeting buyer requirements: 37%¨ Language is a problem for most

immigrant farmers

Buyer Challenges¨ Price

– “Fair” price based on real production costs is too high for many buyers, esp. institutional settings

¨ Transaction costs & logistics– Per unit costs are higher when buying

smaller amounts from multiple farms¨ Quality, appearance & packing

– “It’s difficult to get a clean, consistent pack from small growers.”

– Post-harvest handling is an issue – lack of coolers

Buyer Challenges¨ Grower knowledge of business &

markets– Growers need to know market conditions,

pricing & competition before planting ¨ Product consistency & availability

– Buyers need to be assured of certain volume at a certain time• “Availability is less consistent and less

predictable.”

¨ Communication– Need for clear and frequent

communication. Buyers need to know: • What farmers have, how much, when

available • Need to know this before product is

ripe!

Buyer Challenges¨ Buyers seeking local organic

products also cited challenges connecting with growers

¨ Disconnect need for better systems to provide growers and buyers with information about each other

Opportunities¨ Values-based marketing is key

– Small growers can compete on values, not price

– Building strong relationships– Adaptive, flexible, creative marketing – Online communications & social

networking

Recommendations - Farmers

Small and mid-sized organic farmers can improve their marketing opportunities by: ¨ Competing on values rather than price

– “telling the story” of their farm ¨ Diversified production and marketing¨ Accessing larger markets through

coops, distribution hubs and bundled CSAs

¨ Wholesale: focusing on quality and appearance, packing, knowledge of the wholesale market, frequent communication

Recommendations - Buyers

Buyers can improve their ability to source from small and mid-sized organic farms by:¨ Educating growers on quality,

communication and business standards

¨ Develop cropping plans with growers to coordinate supply and demand

¨ Communicating the importance of buying from small and mid-sized farms to customers

¨ Supporting marketing coops and consolidation points to reduce transaction costs

Recommendations- Policymakers

Policymakers can support small and mid-sized organic farmers by: ¨ Support for programs supporting organic

agriculture¨ Connecting growers and buyers through the

development of online databases¨ Preferential purchase of local and organic

food by public agencies¨ Expanded land-grant university organic

research and outreach¨ Tailoring food safety and direct marketing

regulations to the needs of small and medium organic farms

Recommendations – NGOsOrganizations working with small and mid-sized

organic farms can improve marketing opportunities by:¨ Informational exchanges between farmers and

buyers ¨ Centralized database of farmers and buyers¨ Farmer education - marketing, telling the story,

working with wholesalers, online/digital marketing, etc.

¨ Supporting distribution infrastructure¨ Technical assistance for limited-English

farmers; linking immigrant/minority farmers with their communities

¨ Consumer education on organic, food safety and the importance of buying from small and medium organic farms

Farmer Interest in Solutions

Category Importance (1-10)

% Responding “Important”

Direct Marketing 7.4 92%

Regulations and Certification 6.9 86%

Information, Communication and Technology

6.6 90%

Wholesale Distribution 4.5 65%

Specific SolutionsRecommendation % Responding

“Important”

Promotion of buy-local campaigns 95%

Food safety regulations accounting for farm size and marketing channels 91%

More consumer education on organics and food safety 90%

More consumer education on the meaning of organic 86%

Farmer-to-farmer networking opportunities for sharing information 85%

Funding to help smaller farms comply with food safety regulations 84%

Databases to connect growers and buyers based on products 84%

Simplified organic certification process for smallest-scale farmers 83%

Policies supporting local and organic purchasing for public agencies 81%

Increasing grants for direct marketing and value-added production 79%