When it comes to selling product off of you farm there are a variety of different market streams you can explore: farmers markets, restaurant sales, selling to local grocers, CSAs, and bulk programs – the focus of today’s episode.
Bulk programs offer you several advantages of as a farmer:
You collect a deposit up front giving you some immediate cash flow, you can move a lot of product all at once in one sale, and you build a customer base which can become one of your biggest supporting groups.
These are all reasons why Darby has bulk purchase programs for chicken, pork and beef. While these programs do offer advantages, they also have several disadvantages – they can be harder to sell given the total price point, you typically need to give a discount on the product, and they can be confusing for a prospective customer – the last point being the one we will focus on today.
Notes from this episode of GFL:
- It’s a lot of manage; it’s a lot of education that it occurs. But one thing we noticed with our bulk program is particularly in the case with the poultry and the beef, with pork we see a little bit turn over, is our retention rate on poultry and a beef is been 80-90% year to year. It’s like we get somebody educated with our cut, we are comfortable with it. They immediately come back for more. The retention now on pork is pretty high; I think people are a bit happy on pork. It is seasonal for some people. We got three products here: beef, chicken and pork and I learn over the year is that some people only ever going to purchase stuff by the cut. Would it be farmer’s market or at the farm and from our perspective, there are people out there. They like the idea of paying $6 per pound of pork, they like the idea paying 9 boxes for our beef. They have a different mentality when it comes with shopping. Some people like to drive going to the farm.
- If we discount the chicken 20%, we will essentially be given half of our profit. But on the pork and the beef, they can save 35-40% if they buy that whole animal retail. That’s a huge draw for a family who are on a budget and we have a lot of families, millennial younger families having kids. They one income families or 1.5 income families and they understand the value of eating well.
- The most popular in terms of number of families will be the small package. There are 3 families that are getting the whole cow, but 90% of our families are half cow. Pork is about 50/50.
- I try to be very through. I put as much as information out there as I can without completely going overboard. I get more compliments than I get complaints.
- I don’t do a delivery on a CSA because they getting there on a discount already and I don’t have time to go for 40 deliveries. You were only seeing what we are passing out; our bulk customer on a given butchering date is 25-30% in bringing it home and the other 70% we need to get in that into the freezer. Package all that and spend about 4 hours on the road. If it’s in a week, I got to freeze it and incur cost from it. By the time you factor in, the time to package it and delivery it to somebody you will have a retail farmers market price. They might as well just go to the farmers market at that point. With a very define window, I can deliver it to them. We didn’t have a dedicated delivery truck and that would not be I am focused on. It takes a lot of time and whole lot of effort to build up a delivery program to make it worthwhile. Most farmers around here who do bulk sales do not offer to pick it up for you and pay for the processing and you reimburse them, it’s done exactly on how we do it by most farmers.
- What do people do wrong when setting up a bulk program? Financially, they probably they charge less than they should. But that could be applied in the aspect of marketing. Particularly on the bulk side, they are to give people such a deal. One thing people who set for the bulk program do wrong is they lead with the cost $6.60 per pound and then they retail it for $8-13 a pound. Same thing we do for the beef. Our bulk customer once deposit, it is non refundable. Once you deposit, you are not getting it back.
- If I take somebody a CSA chickens; where I am supposed to put the retail chickens? I only get so much space and I have a big truck. My bulk program I am trying to double my money and my retails cuts I am trying to triple my money. If I can’t make my money triple then there is no reason to stay at the farmers market.
- When we talk about raising pigs and take your time and effort to buy the equipment to raise two pigs, and the effort to raise 10 pigs is like 10% more work. With cows, if you are doing the idea of 3-4 year to make it worthwhile.
- The big reason we do a chicken CSA because we get the cash infusion at the beginning of the year. That cash infusion is huge and we are able to sell the product. But more importantly, we open to a whole customer based because the person who wants to buy a whole pig throughout the year is probably not going to farmers market; they are not going to pay the retail price. It gives a whole value to a different type of customer.
- Could Darby sell everything retail? I can sell everything on beef today. On chicken, I have to work on it selling everything. Pork, I don’t think so. We definitely sell half as much. We are bit more aggressive with our pricing on the pork to move more than that.
- On the bulk program and farmers markets… From a business standpoint, I feel like I’m having them both because they’re two different customers. We learn this summer in our buyer program, we have tap to our third customer. There is a customer wanted discount but they don’t want to buy a whole pig or half of a pig. I think marketing in general, once you get that down and you got your production down that get all of these. I learned early on is that the bulk program will cash flow the animals that you are going to sell at the farmers market. By that, what I mean and what I teach, when I consult on the people in a workshop. If I have 10 pigs and I’m going to retail 6 or I’m going to bulk 6 of them. When I get paid on that 6 bulk pigs, my 6 retail pigs are freeing clear.
- Darby’s CSA page: http://www.simpsonfamilyfarm.com/products/pastured-pork/
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