Using this Toolkit

This toolkit was created by Montana State University Extension Pollution Prevention Program in 2013. The information included in this toolkit does not represent the opinion or endorsement of Montana State University Extension, nor does MSU Extension attest to the accuracy or completeness of any items. This toolkit is based on “Marketing Local Food” a guide produced by the Minnesota Institute for Sustainable Agriculture. Thank you to all those who contributed to the toolkit including Minnesota Institute for Sustainable AgricultureWestern Sustainability ExchangeMontana Department of AgricultureMontana Organic Association, and many others. Special thanks to Tarra Culbertson, Montana State University, for researching and compiling price comparison data.

The intention of this toolkit is to provide Montana food operations with recent research and current Montana examples of “best practices” within the agricultural arena to support infrastructure development and capacity building to add value to Montana’s food supply chain. This toolkit is a launching point and provides resources in a variety of areas to get started in localizing food production and processing. Each section includes an introduction, discussion of benefits and considerations, and a list of valuable resources. The organizations whose materials are included in the toolkit offer additional excellent resources that provide specific recommendations based on type of operation, production practices, and other needs. Montana State University Cooperative Extension staff hold a wealth of information, provide many services, and locate relevant research. Contact your County Extension Office for additional information.

Let us know how you are using the toolkit. Contact Jennifer Grossenbacher, MSU Extension Pollution Prevention, at jenniferg@montana.edu or (406) 994-3451.

Why Sell Locally?

It is no secret that demand for locally sourced food is on the rise. Farmers markets have blossomed in Montana and nationwide over the past decade, increasing from 16 markets in 2000 to 78 in 2012 in Montana. Individual consumers to school districts are increasingly interested in supporting local agriculture. Individuals are even more likely to visit a restaurant if it serves local foods. Clearly, selling to local markets is a growing business consideration whether you produce unprocessed agricultural products such as grains, produce, or livestock or make value-added goods such as cheese, baked goods, or beverages. There are many different avenues to accessing local markets, each comes with benefits and challenges.

The conventional food system increasingly relies on long-distance transport, resulting in food traveling farther from farmers to consumers.2 Consumers are becoming increasingly interested in locally sourced foods and the production methods of those foods.2 Selling locally gives producers the opportunity to connect with consumers, fueling interest in local food, and aiding in pollution prevention by providing in-season food that doesn’t have to travel thousands of miles from farm to plate.

Localizing food production can have positive economic, health, and environmental impacts. Communities can benefit from increased employment within their region due to local food systems.2 Further, localizing food systems can play a part in reducing negative environmental effects.2

Montana’s Food and Agriculture: Problems, Solutions

Grow Montana 

http://www.umt.edu/dining/Sustainability/Farm_to_College/FTC_Docs/GrowMT_prob_sol_low.pdf

Local & Regional Food Systems Publications 

ATTRA

https://attra.ncat.org/attra-pub/local_food/

Local Food Systems: Concepts, Impacts & Issues

USDA Economic Research Service

http://www.ers.usda.gov/publications/err-economic-research-report/err97.aspx#.Ua_OBOvufKQ

Self Assessment

The first step in deciding to expand your business or pursue a specific market is to assess your current situation and capacity, future goals, and desire and ability to expand or change. Consider the following questions:

  • What markets can you currently access easily?
  • What market opportunities are available in your area outside of your current sales? 
  • Do you want to sell your products locally and why? 
  • Are you interested in selling directly to institutions? 
  • Do you want to add value to your products through processing?
  • Do you need additional labor, equipment, etc. to be able to access the desired market? 
  • What resources do you need to understand and enter the market?

A little research goes a long way for entering a new market and avoiding challenges down the road. Talk with producers already selling in the desired market. How did they overcome or avoid costly mistakes? Locate and talk with your local Extension Agent, who can provide information and resources. Find the nearest MSU Extension office online.

Marketing Local Food Guide – Self Assessment 

Minnesota Institute for Sustainable Agriculture 

Link to Document: Marketing Local Food_SA.pdf

Mapping

An important tool in assessing your market potential is food systems maps. You can get a better sense of your local markets both from potential buyers as well as competition and partners by using food systems maps. While none of these maps are completely comprehensive, they provide a great start.

Montana Food System Mapping Project

Alternative Energy Resources Organization (AERO) and Montana Department of Agriculture have created an interactive food system database and map that show market information relating to local food, such as your area’s local food producers, processors, retailers and other food distributors and outlets. These interactive maps can help illuminate and prioritize the gaps in regional and statewide food value chains, and to identify the opportunities for filling those gaps. Take a minute to check out the maps and think about how to connect the food system pieces in your area.

  1. View instructions on navigating the maps. It may be helpful to print or save these instructions on your computer, as the following link will take you directly to the mapping program.
  2. Open the mapping program on your computer.

Note: After opening the mapping program on your computer, refer back to the download able instructions where you will start at Step 3.

Farm to Institution Database & Map

The Farm to Cafeteria Network has created a database of institutions that reported having farm to institution programs in 2013 as well as a map and searchable database of producers interested in selling to institutions. The database is updated on a regular basis and accepts additions and corrections. If selling to institutions is of interest, provide or update your information to the Farm to Cafeteria Network.

Farm to Cafeteria Program Database: http://farmtocafeteria.ncat.org/2013-montana-map/ 

Producer Database: http://farmtocafeteria.ncat.org/producer-database/

Abundant Montana

AERO maintains a database of their member producers. This searchable database includes information regarding production practices, in addition to business and contact information. 

http://www.aeromt.org/abundant/

Food Hub

This online marketplace and directory connects food buyers, sellers, distributors, and other players in the food system. You can use this platform to identify similar operations, locate potential buyers, and list products for sale. 

http://food-hub.org/

Routes to Selling Locally

There are many opportunities to sell your products in local markets. They can be categorized by the relation to the end consumer with two such methods being direct and intermediate marketing. Consider the advantages and challenges to each of these markets in relation to your current and future business goals.

Direct

Direct marketing refers to sales directly to the end consumer of the product.
Examples include farmers markets, CSA, U-Pick, farm/roadside stands, and internet sales. Direct sales are a small, but growing, percentage of total agricultural sales.2 According to the 2007 USDA Agricultural Census, $6,321,000 in direct sales were made by 1,287 Montana food producers.

Generally, direct marketing your products will require significant marketing effort and expenses, have smaller yet more numerous transactions, and a high interaction with customers. Farmers can receive a higher price when selling directly to consumers and may develop strong customer loyalty through direct interaction. However, be sure to compare the price you receive and costs of direct marketing to your current marketing strategy. Direct marketing can require additional marketing costs such as sign-age, websites, advertising, and packaging. Below, Table 1 provides a comparison between prices received for direct-marketed goods versus commodity prices.

Table 1: Comparison of Prices Received from Farmers Through Direct and Commodity Markets

Product Direct Marketed Price Received by Montana Farmers USDA Reported Average Price Received by Farmers

Apples, 1lb. (certified organic)

$2.00

$0.82

Apples, 1lb. (conventional)

$0.70

$0.60

Cherries, 1lb.

$2.25 (certified organic)

$1.41 (conventional)

Carrots, 1lb.

$1.00 - $3.00

$0.27

Potatoes, 1lb.

$1.25 - $2.00

$0.12

Beef, 1lb.

$3.10 - $4.53

$2.43 - $2.67

Soft White Wheat, bushel (60lbs.)

$34.80

$6.42

Sonora (heritage white spring) & Farro (ancient spring) Wheat, bushel (60lbs.)

$3.50-$4.00/lb ($210 - $240/bushel)

$.10/lb ($6.42/bushel)

Direct market prices reflect a range of production and marketing practices. Cherries and apples were reported by certified organic producers (as specified in the chart); certified organic products generally receive higher prices than products that are not certified organic. Carrots, potatoes, beef, and wheat reflect products that are not certified organic. Direct marketed prices are a range of estimates from 2012 that were developed from personal communication with multiple Montana producers.

Direct marketed beef prices reflect sales of custom-processed animals rather than sales of retail cuts. To compare direct marketed beef (custom-processed animals) prices from Montana producers to commodity beef prices, the custom-processed animal weights (live weight or hot carcass weight) were converted to their retail cut price. The USDA converts live animal weight by multiplying that weight by 2.4, and hot carcass weight (un-chilled weight of the carcass after slaughter and the removal of the head, hide, intestinal tract, and internal organs) is multiplied by 1.51.

Direct marketed wheat prices reflect sales based on bushels (60lbs) for an easier comparison to commodity market prices. Few producers in Montana sell whole kernel wheat to the end consumer, however those that are able to direct market wheat receive significantly higher prices than in the commodity market. Also included in the chart is an example of a Montana producer that grows ancient and heritage wheat varieties. Unique wheat varieties can receive significantly higher prices.

Certified organic apple prices were reported on the AMS Market News report by bushel cartons loose (48 pounds) and were converted to a per pound price. Non-organic apple prices were reported by 5lb. bags, this was converted to a per pound price. Cherry prices were reported by 18 pound cartons bagged and were converted to a per pound price (certified organic cherry prices were not available). Carrots were reported by 25 pound sacks loose and 50 pound sacks loose and were converted to a per pound price. Potatoes were reported by 10 pound film bags and were converted to a per pound price.

Commodity fruit and vegetable prices paid to farmers come from the USDA Agricultural Marketing Service Market News. View prices paid. The AMS Market News site allows users to browse reports by commodity, report type, or publication. Customized reports were created to access comprehensive pricing and market information for cherries, carrots, potatoes, and certified organic and non-organic apples. The reports represent annual price averages received by producers for the year 2012 by shipping point averages. Origins of each product were selected on a regional basis (Northwest U.S.) including an average of all varieties, sizes, and grades.

Commodity beef prices paid to farmers come from the USDA Economic Research Service calculations based on Bureau of Labor Statistics and USDA Agricultural Marketing Service Data. View Meat Price Spread reports. Beef prices are the range of average monthly prices received by farmers in 2012. The dollar amounts represent average wholesale prices in 2012; the farmer receives less.

Commodity wheat prices paid to farmers were retrieved from the USDA, National Agricultural Statistics Service, Crop Production, View Agricultural Prices. U.S. season-average prices are based on monthly prices weighted by monthly marketing in the year 2012.

Direct marketing through CSA shares, farmers markets, farm stands and other venues offer an opportunity for producers to implement reusable packaging for share members and customers to transport their produce. Asking, encouraging, or even requiring customers to use reusable bags, boxes, or other packaging is an important part of pollution prevention as approximately one-third of all landfill waste comes from product packaging.

Direct Marketing Resources 

Agricultural Marketing Resource Center

http://www.agmrc.org/business_development/operating_a_business/direct_marketing/

Legal Guide for Direct Farm Marketing

Drake Agricultural Law Center

http://directmarketersforum.org/

A General Guide to Pricing for Direct Farm Marketers and Value-Added Agricultural Entrepreneurs 

University of Tennessee Institute of Agriculture

https://utextension.tennessee.edu/publications/Documents/PB1803.pdf

Montana Farmers Markets Resources 

Montana Department of Agriculture 

http://agr.mt.gov/agr/Programs/FarmersMarkets/index.html

Understanding Farmers Market Rules

Farmers’ Legal Action Group, Inc. 

http://www.flaginc.org/publication/understanding-farmers-market-rules/

Producer Profile - Prairie Heritage

prairie heritage farm family

Location: Power, MT

Farm Size: Total farm size is 30 acres, with 25 currently in production

Livestock: Heritage, pasture-raised turkeys

Products Available: A variety of vegetables, heritage and ancient grains, and heritage turkeys

Products Sold Through: Direct to consumer through winter and summer CSA shares, direct purchases of heritage turkeys, and wholesale to local businesses

Prairie Heritage Farm was started by Courtney and Jacob Cowgill who returned home to farm in Central Montana for the communities that raised them. Prairie Heritage is certified organic and diversified in vegetable production, ancient and heritage grains, and heritage turkeys. Jacob and Courtney not only follow strict organic standards but also experiment with other methods of sustainable agriculture. An example of one of their farming methods is incorporating turkeys into the vegetable garden to help fertilize and as a means for weed and pest control instead of relying on synthetic chemicals. The Cowgills plan to potentially integrate sheep in the future as well to utilize their fertility and weed control. 
The Cowgills see the challenges but also the opportunities of farming in Central Montana when trying to expand their market and the demand for fresh, local products. Jacob believes if you’re interested in eating locally or sustainable, you need to understand the food system and all of your food choices within that system.

Download the printable profile

Intermediate

Intermediate marketing puts a step between the producer and the end consumer. Intermediate markets include restaurants, grocery stores, institutions, brokers, distributors, and collaborative marketing efforts. Generally, selling at this level requires a more consistent supply of product, ability to deliver, and in some cases, adherence to additional policies such as carrying product liability insurance.6, Benefits of selling into intermediate markets is the potential to sell a larger volume of product in fewer orders than directly to consumers. This section covers selling to institutions, restaurants and retailers, collaborative marketing and aggregation, and brokers and distributors.

 

Selling to Institutions

“Farm to cafeteria” or “farm to institution” programs have greatly increased over the past few years. In Montana, the University of Montana operates the UM Farm to College program, purchasing approximately $800,000 of local products from 80 Montana food producers. Further, as is evident by the increase in support and resources from the USDA, farm to school (kindergarten – 12th grade) is becoming a viable market for a growing number of producers. According to the Farm to School Census, 43% of schools nationwide are participating in some form of farm to school programming, spending over $350 million in 2011-12 on local foods Montana schools reported spending $956,304 on local foods during the 2011-12 school year, including apples, beef, carrots, milk and potatoes (the top five local purchases in Montana).

Institutions, such as schools, can provide a steady, high volume, yet lower price market.8 Institutions, from hospitals to schools to prisons, typically have tight budgets and are usually unable to significantly change the prices of their meals. Many large food service operations plan far in advance, even up to a year, so having consistent supply is important. Further, establishing a strong relationship and maintaining clear communication with the food service manager is vital to success in this market.

With support for farm to cafeteria purchasing on the rise, there are many publications and resources to guide producers through the process and requirements.

Farm to Cafeteria Manual for Montana

Farm to Cafeteria Network

http://farmtocafeteria.ncat.org/wp-content/uploads/2013/08/FTC_Manual_090313.pdf

Montana Farm to School & Buying Local Food Guide for Schools

Office of Public Instruction, Montana Team Nutrition Program 

www.opi.mt.gov/Farm2School

Farm to School and Farm to School Census Data 

USDA Food and Nutrition Service 

http://www.fns.usda.gov/farmtoschool/farm-school

Bringing Local Food to Local Institutions 

National Center for Appropriate Technology, ATTRA 

https://attra.ncat.org/attra-pub/summaries/summary.php?pub=261

Farm to Hospital Report and Toolkit

Institute for Agriculture and Trade Policy 

http://www.iatp.org/issue/farm-to-hospital

Selling to Restaurants and Retailers

Selling to restaurants and retailers can be similar to institutions. Building a relationship with the buyer, conveying the quality of your products and services, and a commitment to consistency are important for all markets including restaurants and retailers. However, there are unique opportunities and challenges to selling to restaurants and retail stores. Do a little research before approaching restaurants for the current trends, their menu offerings, and what type of products you can offer. Start with independently owned restaurants, as they generally have more flexibility in menus and purchasing.6

Selling Directly to Restaurants and Retailers

University of California

http://www.sarep.ucdavis.edu/sfs/files/selldirect.pdf

Tips for Selling to Grocery Stores

National Center for Appropriate Technology 

https://attra.ncat.org/attra-pub/summaries/summary.php?pub=387

Producer Profile: Gallatin Grown

gallatin grow couple

Location: Manhattan, Montana

Year Founded: The vegetable farm was founded in 2012; the family farm it sits on has been in the family since the 1800s

Farm Size: 8 acres surrounded by 640 acres of family farm and ranch land

Livestock: Small herd of sheep that eat cover crops and help fertilize

Products Available: Vegetables

Products Distributed Through: Several local Montana schools, on-farm U-Pick, Market Day Foods, local grocery stores and local restaurants

Conni Mahoney is a 5th generation farmer on her family’s land. Conni and her husband, John Mahoney, began Gallatin Grown as a small vegetable farm on part of her family’s larger ranch and farmland. Farming is important to them because they are able to provide fresh vegetables to their community that enables community members to live healthy lifestyles. Being part of a supportive, welcoming community has benefited Gallatin Grown as a new farm in Montana.

Gallatin Grown was started on the principle of providing healthy food without use of chemicals or synthetic fertilizers. In their dedication to conservation, they employ techniques such as crop rotations, cover crops, water conservation, drip irrigation, compost to replenish soil, and sheep to eat cover crops and fertilize the land.

Download the printable profile

Cooperativ