Are You Over-delivering?

Courtesy of Wally S., Wally’s Urban Market Garden, Saskatoon SK 

Deliveries are killers. They are a huge time suck and expense.I’m hearing from other farmers that the fuel and labour costs are getting harder to justify, no matter how valuable the face time with customers is. I feel your pain.

My solution is to have my customers come to me, with my stand at the farmers market being the hub. My CSA customers come to me. They have a running credit at my stand, which also greatly simplifies logistics. Chefs come to me. I post chef visits on social media to promote how they are sourcing local. They re-post, getting cross-marketing going, and if you promote them, that’s even more incentives for them, and other chefs, to buy from you. Creates a virtuous circle.

The point is to turn your farmers market stand into a storefront, with all your marketing channels converging at that single location. You never have a slow day.

SF photo chef at Wallys stand

More and more chefs are coming to Saskatoon Farmers’ Market . This one is from is Dale Mackay’s Ayden Kitchen & Bar. Ayden is one of my steady customers, and Dale was winner of Top Chef Canada a few years ago. Now you know one of the reasons why. Sourcing locally and getting to know your producer. Here one of his chefs is  getting golden and candy cane beets and broad beans. Sometimes they come to the market a couple times a day. For all you foodies out there, here’s how Dale does it. 

 

Revenue is the Benchmark to Beat

Courtesy of Roxanne C., Philadelphia PA

We have said before that SPIN is performance-based, which means that success is measurable. The traditional and often used benchmark in farming is yield.

Certainly the amount of crops you produce is important. But to succeed as a business, what is most important is not the ability to grow in significant volume. It’s the ability to sell, at pricing that makes it worth your while.

Many don’t yet see how this applies to SPIN-scale production because up until the last 10 years or so, there were no markets to support it, so it did not have much of a dollar value. But now there is real money to be made. In the USDA’s 2012  agriculture census valued local food sales at $7 billion.

SPIN’s guide # 18 Crop Profiles is the first attempt to quantify just how lucrative backyard farming can be. These are numbers worth chewing on, and they give farmers different, and highly rewarding, benchmarks to beat.

DDG3 photo 9

SPIN’s small plots generate high yields, but the overall volumes are low compared to conventional farming. 

SPIN photo seed to cash restaurant delivery

 

What is important is that SPIN-scale production can be sold locally at prices that make it worth your while.  

SPIN photo seed to cash invoice for restaurant

 

Even big name hotels and institutions that rely on Sysco are deciding it is worth it to purchase from local farmers because they have less spoilage when they get crops fresh picked. Also, more and more of their customers are demanding it.  

Indoor micro greens production is easy to ramp up

Courtesy of Wally S., Wally’s Urban Market Garden, Saskatoon, SK

Outdoor work has ended here in Saskatoon, and can now focus on indoor micro greens production. The advantage to this type of crop is that it allows you to ramp up production very quickly. Case in point, I got an order from a local chef who works for a large multi-national hotel chain. He has a standing order for bi-weekly deliveries of six .15 lb. bags of micros and one cut tray of pea greens. Micros are $7.50 per bag, and peas are $17.50 per cut tray.

This week he told me he wants 26 bags of micros and four trays of peas for Nov. 8. That’s about a $250 order. Ramping up is easy. That means about 9 trays of micros, which are not a big deal to produce. So I’ll be planting soon for this order.

SPIN photo crop micro greens on scale

Learn how to set up and make money with an indoor micro greens operation in the Indoor Farming with Micro Greens guide in the SPIN-Farming learning series. 

Grow Tables for Shoot Production

Courtesy of Wally S., Wally’s Urban Market Garden, Saskatoon, SK
I’m finding these indoor grow tables to be great for continuous tray-based production.  indoor trays allows for predictable production, especially important for standing orders from  restaurants, since you can’t let them down.  Table is the size of a pool table, 4 ft. by 8 ft. Allows for 16 trays with a two week turn over. Trays go for about $20 on average. I am hearing from chefs this is probably under priced, but I am happy with it. That’s $320, every two weeks. A 30 week marketing period grosses $9,600. So this type of production can add significantly to your bottom line.

This type of production is also much more reliable than soil-based production, though I do that as well.

SPIN photo grow table shoots

Setting Restaurant Pricing

Courtesy of James K., Virtually Green, San Francisco CA

Basic wholesale organic pricing for some major metropolitan areas in the USA can be found using the Rodale Institute organic wholesale prices online tool: http://rodaleinstitute.org/farm/organic-price-report-tool/

The USDA has quite a bit of different kinds of pricing info at: http://www.marketnews.usda.gov/portal/fv

Find out what restaurants are paying for the crop in your area. If your crop is organic then find out the organic pricing. Then ask some chefs what kind of premium they’d pay for the crop if  they could advertise it as locally grown and freshly harvested: some will pay a premium. Also ask chefs what additional premium they would pay for a special variety of the crop harvested at a specific stage of growth: this is where you tailor your crop and harvesting to suit a specific restaurant client.

Using the above approach you may be able to find some chefs who will pay you retail or higher prices for your crop.

Restaurant Sales

Courtesy of Lee McB., Foodscapes Inc. Huntsville, AL
To set restaurant prices, you must know what your costs of production are and your expected return on investment. You can sell at any price, a huge key to sustainability is profit. Restaurants can be goldmines. Restaurants can be a very difficult market. Each sale is chef-driven. At the end of the day knowing what you need and want from the sale of X volume will help you tremendously. Do not let them stretch you out on payment if you do decide to work with them.

Can you have them market you through to the restaurant patron? Advertizing and the inferred excellence that can be conveyed to the patrons are well worth a discount on what is usually a low to mid level volume sale. Provide them with stock photos of you and your family farm let them spend the money to create posters or table top informational pieces on you and your farm.

Take it slow, evaluate one restaurant at a time.