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I want to follow up from a previous post about the importance of customer communication by explaining why I chose Community Supported Agriculture (CSA) as my marketing model.
I’ve got nothing against farmers’ markets as a concept and a model filling a niche for a lot of growers and consumers. It’s just not an efficient model from my perspective.
When we evaluated the idea of using a farmers’ market to sell our farm goodies, we identified a few drawbacks:
Unpredictable demand: When you set up at a farmers’ market, you are never sure what is going to sell that day i.e. the demand is unpredictable. So you sell out of tomatoes by 8 a.m. and at 1 p.m. bring 50 lbs. of unsold cabbage home. The next week it might be the other way around. Which leads to…
Wastage and spoilage: what you don’t sell usually doesn’t keep (so it’s cabbage soup for supper for a week or two.)
Competition for customers: Other growers will have many of the same goods you do. It’s possible to establish a niche by trying to be the earliest grower, or growing unusual or gourmet vegetables. But these all take extra time and attention, and the demand is still uncertain.
And inevitably as the season progresses, there is ‘price erosion’ e.g. one of your neighboring market growers has a great year for growing tomatoes, so all of a sudden she is selling them for $0.50 less a pound than you are. Your choices are to match her price, and reduce your profit, or don’t match it and lose sales.
It’s difficult to get to know your customer: I’ve mentioned that one of the biggest drawbacks from my perspective is that it is hard to really get to know your customers. Yes, you can chat with them (when you are not too busy), and find out a little bit about their preferences in produce. However, even if you find out they like lots of a particular item, your ability to ‘ramp up’ to meet that demand is limited; your season is already underway, and its takes weeks or months to increase production.
And the opportunities to find out what other things they might like, that you could supply if you had known, are limited. Its too late once the season is underway!
Compare this to the CSA model. We solicit customers in our planned delivery area. We meet with prospective customers well in advance of the growing season. We find out their preferences for vegetables. We ask them if there are other farm products they would be interested in. And, we collect payment in advance for the season!
How does this stack up against farmers’ markets?
1. We establish a known demand for our products. Our customers tell us exactly what they would like us to grow, and in what quantities. No wastage, and no wasted effort.
2. A known demand lets me plan better. When I know exactly what my customers want, I can determine my level of production, my labour needs and my space requirements in great detail. For example, if I know that 30 customers each want 2 heads of broccoli every week, and I will deliver broccoli for 15 weeks, I can calculate exactly how many plants I need to start, when I should succession plant, how much room I will need in my greenhouse and my field, and how much labour it will take.
3. No competition for customers. Once a family has signed up with us, we have a customer for the whole season (and hopefully next season too if we do a good job). All our veggies are sold before they are grown!
4. No ‘price erosion’. Customers pay us in advance for the whole season. We determine the price we need for our veggies to make a profit, and then we find customers willing to pay that price. Your income and cash flow are known in advance.
5. Creates a ‘customer base’ for more sales. When we meet with prospective families, we get the opportunity to learn a little bit more about their lives, and to determine if any of our other farm products might interest them. This means that most seasons, our meats and eggs are ‘pre-sold’ as well as the veggies. And if there is something they want that we just can’t provide this year, we can find a partner to supply it, or add it to our planning for next year.
6. BIG point. The advance payment let us ‘bootstrap’ the farm operation; that is, the early cash flow our first year allowed us to construct a plant starting room and a small greenhouse, buy equipment and supplies and pay for part-time farm help, with no out-of-pocket expense to us. There are not many businesses you can start up this way. Plus, no accounts receivable, and no cash floats to mess with.
7. Added Bonus. When you have your production requirements for the season documented, all you and your farm help have to do is follow the plan. This makes training helpers easier, reduces risk (for you and your customers) and gives a little peace of mind that you can actually pull this market gardening thing off.
I would strongly recommend any new grower consider the CSA model. The advantages present a strong case for making this your centerpiece marketing model.
Author Bio: Scott Kelland is the owner of award-winning New Terra Farm near Ottawa, Ontario and is the author of several books for small farmers, including Bootstrap Market Gardening: How to Start-up, Market and Manage a Successful Small Farm Business.
Hydroponics Dictionary
{ 4 comments… read them below or add one }
Very uneven analysis. You provided all the pros for one avenue of distribution and all the cons for another, or do you mean to imply that there are no pros to the farmers market distribution model and no cons to the csa distribution model?
That’s a valid question Carl, but as I said in the post I don’t have anything against farmers markets, it’s just that my experience and the experience of several other growers I know bear out the idea that CSA’ s are a more efficient marketing model. The rest of the post tries to point out those efficiencies.
Another example, somewhere on my site I do a comparison between our first year market garden and a friend’s very similar garden she grew a year later. Despite growing much of the same stuff, in the same way (she actually worked for us to learn how), in a garden just about the same size, we had sales more than double her’s, primarily because we went CSA and ‘locked-in’ our customers, and she sold at market.
Is there a need for farmers markets, and should new growers consider them? Sure. Anything that connects ‘city folk’ back to where their food really comes from is a good thing. And in fact we occasionally send some overflow produce to a market with a neighboring grower. But our centerpiece marketing model will probably always be CSA for the reasons given.
I must say, this is a new concept for me—and I love it! One of the things I see as a common failing point for small businesses is not having a good idea, or any idea at all, as to what the costs are…until they receive the bill and it is too late to do anything about it. This model gets the incentive/reward cycle moving in the proper order. Beautiful!
As you referenced in your reply, connecting ‘city folk’ with farmer’s markets, the CSA model, I think, allows for an even more efficient method of passing on the knowledge to make that connection. Harnessing the developed personal relationships you can really let people into the process of food production—maybe even a personal touch, “here’s a photo of YOUR head of cabbage at week 2!” Knowing how something was made, what it takes every step of the way, backs up the value proposition.
You have hit on it exactly, Randall. The network created by a CSA has a lot of potential value beyond the simple commercial transaction. And the onus is on the farmer to ‘prime the pump’ to get the comunication and the value flowing.
e.g. I write a LONG newsletter to my customers every month, telling them about events on ‘their’ farm, and a bunch of other stuff.
In return I have received great family recipes, cures for garden problems, notice of great books, articles and websites, invitations to special events, and the opportunity to participate in cool ‘eco’ projects e.g. I’m currently providing veggie-growing advice to an engineer and an architect who are building a ‘net-zero’ home that will also produce its own food.
I have connected one of my customers (a bookkeeper) with another that owned a company that needed her services. I have made similar connection between the owner of an alternative energy company and the owner of a business that wanted solar hot water, both of whom were my customers.
I have asked my customers to help me find farm workers. One of them, a high school teacher, sent me two excellent young men that turned out to be great summer farm help.
And I have had hundreds of interesting, stimulating conversations with my customers, that you just can’t put a price on.
Our customers have lives and interests beyond the transaction we are primarily engaged in. The power of a CSA is in letting you see a little bit of their other life, and perhaps engaging in it to mutual benefit.