Local marketing dilemma

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“Local” is one of the hottest trends in foods. A growing segment of consumers want, and will pay for, foods produced in their local areas, for a variety of reasons. Some just want fresh foods or to support their local farmers. Some worry about the environmental impact of shipping foods long distances or have negative perceptions of “big food” or “factory farming.”

Whatever the reasons, the trend is growing. USDA ‘s Economic Research Service released a report this week titled “Direct and intermediated marketing of local foods in the United States,” outlining trends and challenges in direct and local marketing. According to the report, the number of farmers selling local foods directly to consumers and revenue generated through direct sales of local foods bottomed out around 1992, when about 86,000 farms sold food valued at about $650 million, adjusted for inflation, directly to local consumers.

Since then, sales have turned upward, with about 136,000 farms selling over $1.2 billion in local foods. And that’s just foods sold directly to consumers such as at farmers’ markets. Marketing of  all local foods, via direct-to-consumer and intermediated channels such as farmers selling directly to local retailers, grossed $4.8 billion in 2008—about four times higher than estimates based solely on direct-to-consumer sales.

So for some farmers, local marketing provides some clear opportunities to cut out some “middlemen” and sell their products at premium prices. But, the report also reveals some marketing dilemmas, particularly for beef producers wishing to participate. First among these is that demand for local foods is highest in places far from most ranches. The report’s authors note that the value of locally sold food is highest in metropolitan areas, and is geographically concentrated in the Northeast and on the West Coast.

Other key findings include:

  • Small farms (those with less than $50,000 in gross annual sales) accounted for 81 percent of all farms reporting local food sales in 2008. They averaged $7,800 in local food sales per farm and were more likely to rely exclusively on direct-to-consumer marketing channels, such as famers’ markets and roadside stands.
  • Medium-sized farms, with gross annual sales between $50,000 and $250,000, accounted for 17 percent of all farms reporting local food sales in 2008. They averaged $70,000 in local food sales per farm and were likely to use direct-to-consumer marketing channels alone or a mix of direct-to-consumer and intermediated marketing channels.
  • Large farms, with gross annual sales of $250,000 or more, accounted for 5 percent of all farms reporting local food sales in 2008. They averaged $770,000 in local food sales per farm and were equally likely to use direct-to-consumer channels exclusively, intermediated channels exclusively, or a mixture of the two.
  • Large farms accounted for 92 percent of the value of local food sales marketed exclusively through intermediated channels.
  • For small and medium-sized farms with local food sales, more operators identified their primary occupation as farming and devoted more time to their farm operation than operators of similarly sized farms without local sales. Vegetable, fruit, and nut farms dominated local food sales.
  • Among all local food farms, local food sales account for 65 percent of gross farm sales for fruit, vegetable, and nut farms, on average, but only 37 percent for livestock and field crop farms. Excluding local food sales farms marketing solely through intermediated channels, vegetable, fruit, and nut farms grossed $32,000 per farm in local food sales in 2008 compared with $13,800 per farm for field crops and livestock farms.
  • Typical local-foods farms operate fewer acres while generating higher gross sales per acre than

field crop or livestock farms. The average local food sales farmer grows high-valued food commodities on 149 acres that yield, on average, $590 per acre in sales. In contrast, the operator of the average farm generates $304 in sales per acre on 392 acres.

Read the full report from USDA/ERS.

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c andrews    
chicago-kansas  |  November, 07, 2011 at 10:48 AM

Excellent coverage and on target. It is a trend of asture times. Why does one need a jiant TV, expensive cars-clothes-etc.? Why not enjoy the simple life. I saw this happen back in the 1960 when union wages were down sized in the early 1970's which is when staying home and thinking of your stomach became more important.

Montana  |  November, 07, 2011 at 11:29 AM

I prefer not to live in a cave. Obviously one's labor cost is not factored in. This may work for vegetables and small nich markets, but domestic demand for beef is relatively flat and our export partners already have had enuf of local markets. USDA's feel good about one's food is the result of an afulent society and an Admistration full of social engineers. Do consumers want to wait or drive to the nearest farmer's market or just go to their local grocery store?

east coast  |  November, 08, 2011 at 05:53 PM

To Steve: I have heard international demand for beef is up. If domestic demand is "flat" perhaps that is where the local market is coming from. I want to drive to the farmer's market (which is in the grocery store parking lot) or to the farm to pick up my food. I have health insurance but also a below average salary. In other words, Steve's assumptions about the beef market are not mine.

Emmit Rawls    
Knoxville Tennessee  |  November, 07, 2011 at 12:07 PM

This is a free country and this is a niche market that is growing fast. However, I do not seeing local food being able to satisify the average consumer with the food to which they are accustomed on a year around basis. We have developed a large scale agriculture because some wanted to farm and others wanted other occupations. Economies of scale drove the model and the result has been a plentiful year around supply of food at a cost envied by other countries. To impede or damage our current food system will likely result in higher food cost and more hungry people who cannot afford the price.

iowa  |  November, 07, 2011 at 07:30 PM

i feed out about a 1000 hd of beef each year. I process my own beef for home use and I don't know where the rest goes but it not in my local stores. I could sell half of those fats if you could get them processed at a reasonable price

SE Montana  |  November, 07, 2011 at 08:41 PM

When the USDA quit supplying meat inspectors for the 'Mom and Pop' cutters, they successfully did away with people getting local meat.

Maxine Jones    
Midland, SD  |  November, 08, 2011 at 12:18 PM

I enjoy 'local' foods, too, tho am part of a busy ranch producing beef for far more people than in our local area. The thing that troubles me about much of the 'eat local mania' is the question of inspections. My guess is that each state has different rules about that, plus, it is such a recent phenomenon in most of the nation that it certainly would put burdens on any inspection service available. Further, I would sure like the meats to be as thoroughly inspected as is the traditionally produced beef I sell. Re processing locally, don't most states have to provide inspection equal or superior to federal inspection? I know that the plants in SD most likely have better than the average federal plant because here we use the same inspectors, but at the small plants they simply have fewer head to check, so can do a more thorough job.....or expire of boredom! And, isn't it great to have choices, not having to have the entire family working hard as they can just to feed one family, as was the case in our pioneer days???

Amy Sipes    
KY  |  November, 09, 2011 at 04:43 AM

Your assumptions of small meat processing plants is quite ignorant.

Maxine Jones    
Midland, SD  |  November, 11, 2011 at 02:38 PM

Amy Sipes, what is your basis for that statemet? My basis for small meat packing plants is the state of SD. and the years my spouse was on the board regulating meat inspections in SD. It is a fact that local meat locker plants use the same inspectors as do Federal Meat inspection in the state. Meat inspection is NOT required in SD only if the meat is for use of the owner of the animal. If it is to be sold, it has to be inspected. However, I do believe a person can buy a live animal from a farmer/rancher, have it processed and it would not have to be inspected. I certainly would not want to bypass inspection for my family, but apparently some trust their own knowlege on that subject.


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