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Getting full retail for farm production – various strategies

Dale Hodgins
volunteer

Joined: Jul 28, 2011
Posts: 4967
Location: Victoria British Columbia-Canada
    
116
   In almost any business marketing is the thing that will make or break the enterprise.

     With many farm products at the retail level the farmer receives a fairly small percentage of the retail price. This is most pronounced with grains and other highly processed items. In checking out what retailers are willing to pay for fruit and vegetables in my area, I'm likely to receive 60% of the retail price. It's much worse elsewhere. None of them thought much of buying fish from a small producer.

   I only have three or 4 acres which I consider prime agricultural land so there's no way I'm ever going to be big enough that I can afford to play in the economy of scale that allows a farm to produce for large retailers and receive a small percentage of the take.

    So it seems that the only way I'm going to receive maximum benefit for my efforts is to become my own best customer. No, I don't have 20 kids to eat it all, but I do plan to get retail value for much of my production by feeding visitors at my bed and breakfast(not yet built) and travelers on my 24 passenger camping bus(I have that and it's paid for). In many cases I'll get far more than the retail value of this produce since it will be served up restaurant style.

    I've done plenty of horsetrading in the past and will no doubt pay for mechanical work, labor, and innumerable other services with produce from the farm.  By growing a large variety of fruit, vegetables, fish, meat and lumber, yep lumber, it's more likely that a good percentage of this can be used in house or sold to people I know for full retail. If I were only growing wheat or oats it's unlikely that there would be enough people in my personal network to possibly consume enough of this to make much of a dent in supply.

    My largest input cost will certainly be labor and my tour bus is a perfect vehicle(pun intended) to ensure that I have willing laborers. Every tour operator I see, travels two thirds empty half of the time which I consider to be a horrible waste of resources and a lost opportunity for profit. So far as I know I will be the only tour operator on the island who will allow customers who can't afford their trip to work it off on an organic farm. I'm sure that word of this will travel like wildfire amongst the backpacking crowd many of whom have already done woofing elsewhere. This should allow me to stretch the tourist season by a few months. The upscale bed-and-breakfast is unlikely to be occupied in the off-season so I'll fill the place up with young people who are willing to work the farm and go on bus trips. Very few farms seeking woofers can offer such a generous package so I will be in position to sort out the duds and only take those who can get along and be productive.

    I'm building quite a bit more accommodation on the farm than I require since my children are largely grown and I am single. I'll be renting out rooms, primarily to those who want to be fed well and who want to live in an idyllic parklike setting rather than a city flophouse. Tenants will all have the option of paying for some of their rent with farm duties. Again the in-house thing.

    I'm creating a de facto park on 700 m of my tree-lined roadway. Everyone who is travels my paths will see hugle beds,aquaponics ponds and greenhouses, and livestock along with signs indicating that there is organic produce for sale. So by inviting the public to use the steep naturally forested area of the property I will effectively be inviting people to the farm gate as well. When they buy stuff there will be no middleman.

   Once I have enough production to warrant advertising I will contact every customer who has ever bought recycled goods from me since this crowd tends to be concerned about the quality of their food as well. Every customer on the bus will be given the opportunity to purchase what ever is in surplus and I'll encourage anyone who helps me to market to their personal circle. I'm sure I'll think of more ways to get full retail as time goes on.

    By following this path it's quite likely that I will never have so much surplus that I'm forced to sell it off at rock-bottom prices.

    Tell us what you've done to cut out the middleman and ensure that you reap the lions share from your farm, garden and forest production.


Dale's picks - These are some of my favorite threads. Greed - http://www.permies.com/t/10736/md/unbridled-greed-ambition-compatible-permaculture My garden - http://www.permies.com/t/27910/projects/Dale-Day-Garden ethics - http://www.permies.com/t/11534/permaculture/frustration-ethics Good wood bad wood http://www.permies.com/t/12206/hugelkultur/Hugelkultur-Good-wood-Bad-wood Alder - http://www.permies.com/t/10609/plants/Alder-nitrogen-fixation-native-tree Bees - http://www.permies.com/t/10917/bees/time-replace-European-honey-bee Pulling nails - http://www.permies.com/t/10249/natural-building/Removing-nails-recycled-wood-techniques
Tyler Ludens
pollinator

Joined: Jun 25, 2010
Posts: 5326
Location: Central Texas USA Latitude 30 Zone 8
    
  20

I'm looking forward to seeing the development of your endeavor (I almost said "empire", dale. 

I've only sold a few eggs from my place, so I don't have much of a story, just egg sales to friends.  I doubt I made a profit.

Idle dreamer

Dale Hodgins
volunteer

Joined: Jul 28, 2011
Posts: 4967
Location: Victoria British Columbia-Canada
    
116
    If you got full retail for those eggs then you are queen of your domain.

      On the empire thing.

    I am by nature a benevolent dictator and definitely view my business and my life as being somewhat separate from the mainstream. I'm constantly patrolling my borders looking for intruders but also testing for weakness in order to figure out where to invade next. I consider mainstream home-building and agriculture to be seriously flawed and therefore ripe for revolution. My contribution to this will be to participate on the side of the good guys but also to help the others fail and then pick the carcass of failed enterprises for resources.

     I remember the movie mad Max where he was accused of living off the carcass of a dead society and I thought, "what's wrong with that ".

    I moved to this side of the continent specifically so that I could feed off the waste stream of a very wasteful place. When I first entered the demolition business one of my competitors stole from me and attempted to sabotage my efforts. I targeted him in every...(I deleted a very juicy story in anticipation of being reported for advocating vigilante-ism, use your imagination )    One of my proudest moments ,an opponent utterly vanquished. He was a druggie, liar and thief and therefore according to  "the book of Dale" fair game.

     I don't have an empire yet but I'm working on it .

   
John Polk
steward

Joined: Feb 20, 2011
Posts: 6741
Location: Currently in Seattle. Probably moving 1 hour north by end of the year.
    
143
Make certain to investigate all local laws.  There was another B & B, elsewhere in Canada that was told they could not serve their farm produced, organic eggs to their customers...the eggs had not gone through 'the system'.

Canada's biggest downfall is that they are too close to the US of A. and your bureaucrats are learning bad lessons from ours!
Dale Hodgins
volunteer

Joined: Jul 28, 2011
Posts: 4967
Location: Victoria British Columbia-Canada
    
116
    If such a law exists then that's one I'll be braking, in the open and hopefully on camera. Of course there's a dozen ways to skirt around laws. It may be necessary to sell someone a live fish and later cook it for their supper.

   That must have happened in Québec where bureaucracy upon bureaucracy flourishes. I understand the babysitters are going to unionize and go on strike on New Year's Eve
Tyler Ludens
pollinator

Joined: Jun 25, 2010
Posts: 5326
Location: Central Texas USA Latitude 30 Zone 8
    
  20
I tend to lean the other way.  I don't investigate local laws, or any laws. 

As someone said, it's easier to ask forgiveness than to ask permission.

But that's just my personal way of conducting myself.  I am not a law abiding citizen.  I do not advise others to conduct themselves as I do.

Dale Hodgins
volunteer

Joined: Jul 28, 2011
Posts: 4967
Location: Victoria British Columbia-Canada
    
116
H Ludi Tyler wrote:
 

As someone said, it's easier to ask forgiveness than to ask permission.




Dale Hodgins
volunteer

Joined: Jul 28, 2011
Posts: 4967
Location: Victoria British Columbia-Canada
    
116
    This works in some cases but probably not a good idea if it involves butting into line or anything sexual
Tyler Ludens
pollinator

Joined: Jun 25, 2010
Posts: 5326
Location: Central Texas USA Latitude 30 Zone 8
    
  20
Yes, I didn't mean in a social situation! 
Dale Hodgins
volunteer

Joined: Jul 28, 2011
Posts: 4967
Location: Victoria British Columbia-Canada
    
116
It's taken some time, but I have been producing a surplus for two seasons now. My cost of living has dropped and the quality of my food is even better than before. When I'm invited somewhere, people know that I'm not bringing wine or steaks or whatever costs money. I show up with vegetables and wild harvested fruit.

I've marketed on the street and to friends for weekly delivery. I meet at least one person a week who would like to become a weekly customer. This is just in chatting with people with no surplus available. I'm sure I could get a hundred regulars in short order, if I had enough production to fill the orders. It is far easier than I expected. I've got 50 names stored away, just from me being me and chatting with people. Vegetables are an easy sell in Canada's healthiest city. I've met over half of these people while gathering coffee grounds and seaweed and wild harvesting fruit. They all get directed to this site and sometimes to geoff lawton.
Bethany Dutch


Joined: Jun 24, 2012
Posts: 129
Location: Colville, WA Zone 5b
    
    7
Not that I've been on the farm long, and currently not producing anything yet but I DO have a business I run from home and my education/expertise/passion is business and marketing... so here's my thoughts:

One of the keys to making it work is not only lowering your cost of living but producing the highest value product for your time. There are, yes, the items you can grow and produce at home, and then sell locally, but unless you live in a high cost of living area, you won't be able to get top dollar.

The key, IMO, is to be able to produce a product you can sell long-distance to those who are looking for such a product, leveraging the internet. Or, in other worse, live in a low cost area while selling a high value item and a high price to those in a higher cost/income demographic than what might live in your area. It's a downhill battle if you can accurately identify products or things people are already searching Google for, because there's an existing market.

Unfortunately, this also means that if your items are a processed food product, you can't sell across state lines without expensive licensing, but there are so many things that can be made or produced on a farm, with land, etc. that are very marketable online.

For example - how many people have thought about selling homemade soap? Homemade soap sells for about $6 for a bar, which is the lowest price I'd personally pay without beginning to have doubts about the quality. A lot of people in poor areas, however (which is where you usually find the best land prices!) won't pay that much for homemade soap. So you sell online, but soap isn't an easy sell online because people like to smell it first. Or you travel into the city to sell it there, but then you've got to deal with, well, travel. And, no, there's not a whole lot of profit in homemade soap (use to have a soap business, wouldn't do it again). So, really not that great of a "bang for your buck" (or hour, as it were).

Taking the same general industry, however, there's lots of potential moneymakers in the skincare industry. For example - I have a Piteba seed/nut oil press, which IIRC cost me about $150. I can plant some styrian pumpkins (hull-less), harvest the seeds, run them through my press for some beautiful pumpkin seed oil - and could use it or sell it as-is, but I'll get the most bang for my work if I add some essential oils, package it up in a nice dropper bottle, and sell it online for $50 an ounce (or even half ounce) as a high quality, natural upscale facial serum. The press solids would go to feeding the chickens, along with the rest of the pumpkins (not much flesh on those). That's shit-tons better turnaround on my time, since most of the work will be in growing the pumpkins and pressing the oil from the seeds.

There are tons of people who will pay top dollar for something like that - naturally/organically grown pumpkin seed oil, high quality, minimally processed, etc. Most of these people live in big cities and have higher incomes than your average rural person shopping at a small town farmer's market... which is why I tend to shy away from considering products I can sell at my local farmer's market.

The biggest problem with this, or common obstacle if you were - is that most producers are not marketers, and they run into several issues because of it:
1. If you want to sell a high end product at a high price, you have to have high end packaging and presentation which is not always easy for farmers/producers to do themselves.
2. Most people who are making a product for sale, are not wealthy already, and tend to be more frugal, and so they often underprice their products because they are assuming their customer thinks like them.
3. Related to #2, people often think they have to compete on price, which is always a losing game. If you create rabid fans for your products, you don't have to compete on price - but you need to have a really GREAT product that they can't just go buy anywhere else. How you set your price says a LOT about your product, and if you undervalue your product, so will your customers.

I have reminded more than one person that if Prada can charge (and gets!) $3000 for one of their purses, there are certainly people willing to pay top dollar for a handmade one (especially if it's made from leather from your own cows that you tanned yourself!).

I think that's it for now. This is actually a topic that is near and dear to my heart, since I am both business/marketing minded as well as a permie. One thing that also often gets overlooked is that in order to make a good living on your farm, it doesn't necessarily have to come FROM the farm. For my business, I custom print photographic, personalized, and monogrammed coffee mugs, luggage tags, and phone cases. I do some bigger local shows but 90% of my business is online.

My business has nothing to do with my homestead or farm, but I sell a high value product, domestically and internationally, and I can make enough in 20-30 hours a week to support my family (because of a very low cost of living) which allows me the freedom, time, and (hopefully soon, as I build things up a bit after my coming divorce) the financial resources to be innovative with my homestead. And in my case, I can be the single mom supporting three kids on a less than 40 hour workweek without having to punch a clock for minimum wage or have my kids be raised by daycare employees... absolutely priceless.


Just me and my kids, off griddin' it at Uncle Dutch Farms.
Dale Hodgins
volunteer

Joined: Jul 28, 2011
Posts: 4967
Location: Victoria British Columbia-Canada
    
116
My nearest customer is less than a city block away. The most distant is 10 blocks away. My goal is to market everything in about 1/6 of Greater Victoria, within a 5 km. radius. There are about 70,000 people in that zone. More than enough.
Dan Boone
volunteer

Joined: Jan 24, 2014
Posts: 967
Location: Central Oklahoma (zone 7a) ~39" rain/year
    
  78
It's funny how almost everybody on this forum has access to some sort of unique resource surplus that furthers their permaculture purposes. Dale seems to have several, but his ready access to a densely-populated and fairly wealthy urban area is the one mentioned in this thread. With me, it's access to more unmanaged family land, much of it hardwood forest, than I can ever use efficiently. For somebody else it's a complete set of mechanized farm equipment, or a huge inherited barn, or a gravel pit, or a friendly tree-trimming crew. I don't mean to derail this thread, but I'm starting to notice with interest how the suggestions and strategies people share are shaped by whatever particular resources they themselves have in surplus. (And by whatever resources they are short of, too: most often land, frequently money or time, followed by a long list starring health, expertise, irrigation water, topsoil, mulchable resources, et cetera.)


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Dale Hodgins
volunteer

Joined: Jul 28, 2011
Posts: 4967
Location: Victoria British Columbia-Canada
    
116
I think many people have surpluses staring them in the face,but they don't necessarily recognize that an opportunity exists.

The same resources and opportunities exist in my city for everyone, but I don't know very many who take advantage of surplus resources. Buy going over issues like this, others can learn to recognize and seize opportunity.
Dan Boone
volunteer

Joined: Jan 24, 2014
Posts: 967
Location: Central Oklahoma (zone 7a) ~39" rain/year
    
  78
I agree with that. One of the greatest things about this board is that the whole "the problem is the solution" mentality means I'm always learning new ways to take some odd surplus that most people would consider clutter or garbage or waste and turn it into value.
Dave Vazquez


Joined: Feb 04, 2015
Posts: 4
Sell directly to restaurants! Good chefs are thrilled to get local, fresh ingredients but they are way too busy to go out and source them. Take a sample to them with your contact info and they'll be calling in no time. One restaurant uses 10-15 dozen eggs a week. So far I only have one customer and they buy anything and everything I can produce! And the chef/owner is always begging for more. My biggest problem is that I can't produce enough! Sometimes they don't want to bother buying 50 pounds of squash from me when they need 500 pounds just for that week. So go get to know your local chefs and you'll never have trouble finding a buyer and getting full retail prices.
 
 
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