Published February 16, 2012
From rural country roads to busy urban areas, farmers markets are sprouting up in every corner of America, creating new opportunities for small business owners to introduce their products.
Farmers markets can provide an ideal setting to establish customers and create brand awareness, but experts warn small business owners taking their goods to market must have a thick skin, extreme discipline and a strong ability to connect with customers.
Red Jacket Orchards has grown from its New York roots to branch out all over the country. The farm has 600 acres with 450 acres are devoted to apples that get sold on the farm, and at farmers markets that General Manager Peter Schulick, helps organize. According to Schulick, the orchard attends about 57 markets during the summer and eight in the winter all around the New York City area.
Farmers markets can provide brand exposure, but Schulick said they can be hard to staff and don’t tend to generate a lot of revenue. In fact, the opposite end of the health-consciousness spectrum, big health food store Whole Foods has helped his bottom line by carrying the farm’s products.
“You get a real premium for your product, but the amount of money it takes to go to market is a really skinny margin,” said Schulick. “You have to have a great business sense. We were able to parlay [our farmers market experience] into working with a distributor to grow our juice all over the country.”
For Ryan Smith, the co-owner of Bitchin’ Sauce in Carlsbad, Calif, farmers markets have helped his barely-a-year-old business gain momentum and customer loyalty. He started selling his vegan sauces with his sister at local markets in 2011 and now attend more than 20 farmers markets a week. The company has grown to eight employees who are all also family members.
When it comes to the market experience, Smith said the best part is the people they meet. “It’s more than just a product. It’s an experienced because our heart is in our products because my whole family works this market, [customers] get to meet my whole family.”
Smith advised other small business owners looking to get into the farmers market experience to spend as little money as possible when first attending to test the market and their product. Once a product or service is determined to be viable, make a plan and don’t get discouraged along the way.
Todd Appelbaum, owner of ostrich farm Roaming Acres, has seen his business increase year over year since attending markets in his home state of New Jersey. “The upside is as someone that is farming, we can actually sell our product retail,” said Applebaum. “The downside is we have to hold inventory. There is more up than down compared to selling it wholesale.”
For some small business owners, getting to the markets is half the battle. David Graves, president of Berkshire Berries, travels from Becket, Mass., to New York City. He leaves at 2:30 in the morning to sell his jellies, honey and maple syrup to Manhattan residents. Graves, his wife and daughter run the organization, and he keeps bees on rooftops in New York for his honey supply. The weekly commute to and from New York remains the biggest challenge for him.
Graves said that the four markets he attends each week have increased his business year over year, but the transportation costs keep his profits from truly taking off.
“People come to the markets because they are speaking to the person who grows and makes the product,” said Graves. “We have first-hand knowledge of where the food comes and how it’s grown.”
Graves says that the best way to enter into the famers market scene is by starting off as doing it as a weekend thing and seeing what people really like. In this economy, having a business plan first is also a key factor for success.
“We are standing [at markets] for 15 hours a day, and you get all kinds of people, said Graves. “Not everybody is going to like your stuff, and you kind of have to bite your tongue. You are going to have to like people. That’s important.”
Jason Henderson, an agricultural economist and Kansas City Federal Reserve Omaha Branch vice president, said the local agriculture movement has boomed over the last decade, and small businesses should also look to capitalize on the trend of local restaurants tapping into local growers for fresh and specialized products.
President of U.S. Commodities Inc., Don Roose, said that agriculture today has turned into big business and expects the niche market of local farmers markets to continue to expand.
For small business owners looking to venture into the famers market scene, here are some tips from agriculture experts to help dig into the business.
1) Know Your Costs and Price Right. “Traditionally, agriculture is a commodity-based market and your price is based on your marginal cost to scale,” said Henderson.
2) Go organic. According to Henderson, “the other success people have been having is in organics like selling traditional old glass milk you used to get at the grocery stores to other organic products.”
3) Start Small. “Getting into a niche market, your potential downfall if things stumble is much less,” said Roose.