Ag Marketing NEWS UPDATE - MAY 17, 2011 Ginger S. Myers Marketing Specialist University of Maryland Extension Director, Maryland Rural Enterprise Development Center gsmyers@umd.edu 301-432-2767 x338 A Booth at the Farmers’ Market: Profit or Loss Farmers' Markets are an increasingly popular form of direct marketing for both farmers and customers alike. Farmers' markets differ from other direct marketing operations due to the fact that growers share insurance, advertising, and marketing costs. Successful farmers' markets can substantially increase the incomes of participating vendors. Maryland now has farmers’ markets operating in every county of the state and the City of Baltimore. During 2010, there were more than 6,100 farmers’ markets operating in the United States. Major advantages to producers who sell at farmers' markets include: Farmers can usually command their best prices at a Farmers’ Market. Studies indicate that farmers’ market vendors receive between 40%-70% more for their products at market than selling them through wholesale outlets. Producers have limited liability for customers, because they are not on the farmer's premises. Parking space, restrooms, and other facilities are not the farmers' responsiContinued on Page 2 University of Maryland Extension programs are open to all citizens without regard to race, color, gender, disability, religion, age, sexual orientation, marital or parental status, or national origin. A Booth at the Farmers’ Market - Profit or Loss continued... bilities. The facilities are provided by the market. market and works the booth himself. The market runs from 8:00 AM to noon. Farmer Paul calculates he has Attracting customers is a function of the market $300 left from his market day after he deducts his and farmers. This marketing technique may be product costs. Is this correct? unfamiliar to many farmers, since it is usually Let’s look closer at all the numbers that Farmer Paul unnecessary for them to devise marketing needs to consider when calculating whether his market campaigns for their customers. day was profitable. However, there are also costs associated with participating in a market. These include: the Booth Rental $ 15.00 need for transportation to the market site, sales tables, a cash box or register with change, Total Labor (7½ hrs. @ $14/hr) $105.00 organic produce and price display signs, various Time to pack his coolers(1 hr.) Set-up, work the containers, certified scales or other measurement market, and tear down (6 hrs) Time to unpack the coolers when he arrives home (½ hr) devices, tents, tent weights, tables, and sales people. Transportation (time and mileage) $ 12.00 Disadvantages include: Time required to transport and sell at the market takes away from the farm operation. Market hours are controlled by the policies set for the farmers' market, which may not be ideal for individual producers. Also, advertising—or lack of it—is controlled by the market. Markets that are poorly located may not attract consumers and other vendors may operate in a manner that depresses price. Other costs $ 15.00 Product Liability Insurance $ 15.00 (Spread over his 20 week market season—table, table covers, tent, coolers, signage ) State and County Licenses and Permits $ 12.00 (Processing, vending, sampling) Many market vendors don’t have a good accounting of the true costs of participating in their markets. Total fixed costs per day for Farmer Paul to market at this venue is: $174.00 These costs are needed to determine: His profit for the day is really ($300 – $174 in marketing costs) or $126.00 [1] The profitability of the market [2] Amount of product needed to be profitable [3] Assists with pricing [4] Assists in appraising the viability of the market [5] Time management tool for assessing time invested vs. the financial returns If this figure is not satisfactory for Farmer Paul, he now knows he needs to sell more product since most of his marketing costs are fixed costs and will not change from week to week. Farmers’ markets provide excellent venues for developing entrepreneurial marketing skills, providing instant feedback on product variety and presentation, Here’s a sample of a market evaluation and budget. and are a great way to connect directly with customFarmer Paul sells his USDA processed, farm raised ers. When you take the time to measure your true beef at a farmers’ market that is just 6 miles from profitability from a market, you can then implement his farm. He pays $15 per week for his space at the strategies to improve it.