Are Farmers' Markets the BEST Source of Profit for a Farm? Maybe Not
Small and Medium sized farms are BUSINESSES and must be run as a business. With the plethora of fantastically fun farmers’ markets springing up like wildfire, there is a sense of false security that direct retail sales, by being a vendor at a farmers’ market, is the best and most valuable avenue for generating business profit from your farm.
Statistically, this isn’t necessarily true, and more often than not small farms and producers utilize only direct retail sales at farmers’ markets as their only venue for profit generation. If you run the numbers, and reminding yourself that “time = money,” you’ll see that vending at farm markets is often the most time expensive, most labor intensive, and results in a greater potential damage to both sold and unsold products via weather conditions and transport.
Additionally, you will find that vending at a farmers’ market is also the most statistically risky venue for generating sales as profit is directly dependent on outside forces: the weather, the number of customers any given day at the market, other vendors and insider politics, outside community events that draw your customers away, and more. Many farms find themselves spending 3-4 hours of labor per each hour of direct selling through their booths. Adding the numbers of transport costs, the cost of labor, and the cost of product losses via transport damage or inability to resell those products after the market closes; many find that selling at farmers’ markets is, what we call in business, a loss leader.
Smart farm businesses diversify their sales mix to add on other forms of profit generation to minimize the high risk of vending at farmers’ markets while still enjoying all the positive benefits that farm markets bring – direct consumer interaction, community involvement, business and branding exposure, and much, MUCH more!
Farmers’ markets are WONDERFUL! I couldn’t speak more highly or support them more!!!!
In This Whitepaper, we’ll tackle the topics of diversifying the agricultural sales mix for small and medium producers to include farm markets, should you choose, while also laying a solid business foundation for multiple revenue sources with multiple risk variables to provide a full and sound profit foundation.
It is extraordinarily IMPORTANT that farms create 4 Separate Sales Channels for Solid Agricultural Sales. The proper product mix for an agricultural business is to mix and have all 4 modes of profit activities: Direct Retail Sales, Indirect Retail Sales, Wholesale Sales, and Partner-Profit Sales.
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