DR. Don Research Update
September 5
California leads the way in direct marketing: results of a survey

By Don Lotter, Ph.D.

September 5, 2003: Direct marketing allows a farmer to capture a higher proportion of the final price paid by the consumer for food. A study recently made available by the California Institute for Rural Studies gives details of direct marketing in California compared to the rest of the U.S.

California accounts for about 15% of total U.S. direct marketing sales. The number of direct market farmers in California grew 13% from 1992-97, while growth was 8% nationwide during the same period. Growth in sales increased by 84% in California vs. 24% nationwide during that time. Six thousand farms, or about 10% of California farms, participate in direct marketing.

Of all direct market channels, farmers markets account for 80%. Other channels include roadside stands (18%), on-farm word-of-mouth sales (18%), Internet/mail order (6%), Community Supported Agriculture (5%), and U-pick at (4%) (many farms direct market via two or more channels, thus the numbers add up to more than 100).

Higher per-unit profit margins from direct marketing relative to conventional marketing channels were reported by nearly two-thirds of direct market farmers, with the average net profit 65% higher per unit of product. Direct marketing is found to be particularly important for entering farmers starting a farm.

More than half of the farms using direct marketing had total sales of under $25,000 per year. Community Supported Agriculture farms were quite robust, with a majority grossing over $100,000 per year.

While only 2% of California farms are certified organic, 18% of DM farmers sell exclusively organic. Organic farmers had double the diversity of products and crops than conventional direct market farmers.

More information is available at the California Institute for Rural Studies. www.cirsinc.org

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