Many farmers reach a point where farmers markets are no longer able to suffice as a primary sales outlet. As farms grow, adding additional markets may be prohibitive, yet the current outlets may not offer opportunity to expand sales volume. If farmers markets are no longer working as the primary sales method, and other retail options such as a farm store or community supported agricultural shares aren’t likely to attract enough of a customer base to support a growing farm, wholesale may be the answer.
Before embarking on this route, some planning is warranted. Learning from the experience of other farmers can be invaluable.
Routes to expansion
“We wanted to make a living farming. We just couldn’t see the sales volumes at the farmers markets,” Carly DelSignore, Tide Mill Organic Farm, in Edmunds, Maine said. DelSignore and husband Aaron Bell are the seventh generation to farm the family land.
With 45 cows being milked, 15,000 broilers, 300 egg layers, 500 turkey and 120 pigs, Tide Mill Farm has diversified into selling their milk, eggs and meats via wholesale outlets. Milk is sold to Horizon, as well as to cheesemakers, and is bottled for their own farm sales. Seventy percent of their meat is sold wholesale, with the remainder being sold via direct retail outlets. They also grow some vegetables, as well as Christmas trees.
Because the farm is dairy and livestock based, there is “a ton of overhead” needed. “It takes volumes of sales to support” the needed infrastructure costs, DelSignore said.
An enterprise budget enabled them to determine “what is that scale that you need to come ahead with more money, instead of more expenses,” she said. They worked with a financial advisor to get the “numbers where they need to be in order for us to make money doing what we love.”
The idea to expand beyond retail came to fruition after the couple was approached by a cooperative seeking to sell their products. The store was three plus hours away, and the volume wouldn’t justify the expense. Realizing they couldn’t do this without other markets, the couple was determined to find those markets, and put the infrastructure in place to make it all work.
“We were committed to it and tried to figure out what channels we needed to go through to make it work,” DelSignore said.
For Ian Jerolmack, owner of Stonecipher Farm in Bowdoinham, Maine, wholesale markets account for 100 percent of his sales. With 55 acres of vegetables, Jerolmack scaled up out of “necessity” when two farmers markets were not bringing in nearly enough sales.
“Beyond exhausted,” he made the decision to change plans, enter the wholesale market, and did so with no real plan other than to make a living. Needing to increase sales without extending the time or distance spent traveling to make them, he realized that bundling accounts, and concentrating in a “key market area,” was the only feasible plan, Jerolmack said.
“There was no real decision to scale up,” Jerolmack said. “It just kind of happened.”
In order to have enough meat to supply wholesale accounts in a cost-effective manner, Tide Mill Organic Farm had to gradually increase their own poultry slaughtering capacity, and develop an ongoing relationship with a slaughterhouse for their other livestock.
“You have to have that butcher date set months in advance,” which is difficult, DelSignore said. “It’s a major shortfall in the livestock situation. You have to have a partnership with a processor.”
The farm has a FSIS exemption (Food Safety and Inspection Service) for on-farm poultry slaughter, which has annual limits of 20,000 birds. But looking ahead, they opted to build a USDA certified plant — a “very expensive” enterprise, and one which “just isn’t set up for the small farm.”
While they remain operating under FSIS exemption currently, the plan is for USDA certification of their plant. They are working to find partners to help support their investment in the facility, and ultimately slaughter for regional farmers as well as themselves.
In order to justify such an expense, as well as to secure large wholesale accounts, the farm needed to be able to slaughter poultry year-round. That required housing, heating, lighting and other infrastructure for the birds, as well as a freezer for storing product. Going year-round meant more labor, too. They currently have eight full time and 17 part-time employees.
Because the farm was becoming more diversified, farm management was divided up with DelSignore handling poultry and processing, and her husband dairy and hay. In addition, many of the wholesale accounts don’t handle fresh meat. Most require weekly service, so a dedicated person to make sales calls and take orders is needed. Her mother-in-law fills that role.
For Jerolmack, year-round production was also key to wholesale success. In order to supply vegetables to restaurants and grocery outlets, he needed to focus on year-round supplies, and volume.
A propane-heated greenhouse was a priority. Jerolmack now devotes a half dozen or more acres to winter vegetables. These winter vegetables require storage facilities including a cold cellar and walk-in refrigeration units. He has three stainless steel shipping containers, each 40 feet long, which offer passive winter cooling.
Jerolmack also needed an immediate investment in better farming equipment, seeds, fertilizer and other expenses. With the philosophy that you have to “spend money to make money,” he established line of credit with seed and fuel companies to support his expansion. He also needed to invest in additional labor.
“You will get more back if you pay $10-12 an hour. To pay people enough money was huge,” in making his expansion successful, he said.
Jerolmack acts as his own distributor, and he distributes products for other area farmers. If his own product is short of the wholesale demand, he will purchase other farm’s produce and sell it — under the other farm’s brand — to his accounts.
“I wouldn’t buy something from them I didn’t need,” he said
Tide Mill Organic Farm is focused on branding their products, and increasing sales of their current accounts. Product labels are very important, and serve as point-of-sale advertising.
“I don’t want more accounts. I just want the accounts we are working with to sell more,” DelSignore said.
Without farming any other land, and focusing on Portland, Maine restaurant sales, which account for over 90 percent of his business, Jerolmack set his “quality of life ceiling” and has grown his business to meet that goal.
While the farms approached scaling up differently — one with a lot of advanced planning, and one virtually without any — they both achieved success in wholesale marketing by finding cost-effective ways to meet the quantity and quality needs of wholesale customers. By stepping up to fill in a gap in the supply, and doing so with targeted expenditures and clear goals in mind, these two small family farms have found wholesale success.
The Maine Organic Farmers and Gardeners Association recently held a workshop on wholesale marketing, appealing to both vegetable and livestock farmers, during the Maine Agricultural Trades Show. DelSignore and Jerolmack were the featured speakers.