Direct Sales During COVID-19
Farmers Who Sell Directly to Consumers Face Uncertainty, But Some See Higher Demand
GLENWOOD, Iowa (DTN) -- With roughly nine out of 10 Americans now under some type of order to stay at home, farmers who sell directly to consumers are either losing or gaining sales depending on whether they rely too much on restaurants and institutions, or can either sell farm products online or deliver them directly to consumers.
Then there are nearly 9,000 farmers markets nationally, many of which don't kick off until mid-to-late spring, that will likely face restrictions not just on social distancing but crowd sizes, assuming they are allowed to open.
In the stimulus bill that passed last week, Congress included provisions requiring USDA to help farmers who sell into local or regional markets. Several farm organizations on Wednesday wrote Secretary of Agriculture Sonny Perdue citing that these could lose as much as $1.3 billion just between March and May, according to one forecast. Without providing details exactly how USDA should compensate those producers, the farm groups projected their direct aid needs would top $1 billion.
Farm and ranch groups are trying different approaches to help their members. R-CALF USA has started a website, https://usabeef.org, to connect farmers and ranchers who sell beef "born, raised and harvested in the U.S." to consumers.
Also to help farmers, the American Farmland Trust has launched a Farmer Relief Fund (https://farmland.org/…) looking to offer small grants of about $1,000 to farmers who market directly to consumers. The fund earlier this week had raised about $75,000, but AFT hopes it would reach $1 million to aid farmers.
LOST PRODUCE SALES
Heather Spray and her husband operate Joy Lane Produce (https://www.joylaneproduce.com/…) near West Salem, Illinois, which grows lettuce and greens hydroponically for the local food market. As much as 85% of the Sprays' business has been selling to area restaurants, predominately around Evansville, Indiana, but also southeast Illinois and northern Kentucky. The family has a small retail shed off the highway where they sell as well.
"We lost business rapidly overnight when all of the state orders started coming through," Spray told DTN. "All of the state orders came in within just a day or two of each other. We sell to local restaurants, and over half of them just shut down. They don't have a good delivery or pickup. Some are still doing curbside pickup, but salads are not a favorite right now with people getting takeout. So we have lost almost all of our restaurant business."
Without knowing how long the restaurant closures will last, Spray said they are continuing to plant their crops as normal.
"We were hoping most of our restaurants would be able to open back up in the next week or two, but I don't know if that is going to happen. We hate to stop planting because if restaurants are open in another month or so, we still want to be able to provide that product for them."
The Sprays also grow traditional commodities, so they are familiar with their local Farm Service Agency office. But Heather Spray said she doesn't know how aid would work for farmers who have lost direct sales.
"So we have a relationship with FSA on the row-crop side, but not on our greenhouse," Spray said. "I don't know how they are going to divvy that money up and who is going to get what because there has been no reporting on the direct sales like there is on the commodity side. Selling direct is a lot different than a commodity grain grower."
Daniels Produce (http://www.danielsproduce.com/…) near Columbus, Nebraska, grows fruits and vegetables on about 600 acres and sells produce across the Midwest and as far away as Florida. Much of the Daniels' family participates in farmers markets in larger cities in Nebraska that are for now tentatively slated to start in May.
"Those are the things that are going to impact us first, and I keep calling the market managers and, honestly, they are scrambling to figure out what to do," said Kelly Daniels Jackson, who oversees marketing for the farm her parents started.
LATER START FOR MARKETS
The farmers markets may start a couple of weeks later than normal and initially limit vendors to produce, meat and proteins -- restricting the cooked-food vendors, bakers, craft makers and others -- as a way to spread out the social distancing at markets that typically draw thousands of people every weekend. Farmers markets are typically highly social events with whole families, pets, coffee, snacks, sampling and browsing products. Much of that is going to have to stop, at least for the time being, Daniels Jackson said.
"They are really thinking about how to protect the public and continue to do farmers markets," she said.
The wholesale business, though, takes up as much as 90% of Daniels Produce's actual business, and it really picks up in the middle of July. So far, wholesale customers still want the contracts, as the vast majority of Daniels Produce ends up in grocery stores.
"Our crops take five or six months to produce, so we have to kind of anticipate it's going to be business as normal," Daniels Jackson said. "I'm hoping everything will be semi-normal by then."
Mark Roh, owner of a vegetable farm near Abie, Nebraska, works with up to 40 other farmers, most of which have small acreages that might have up to 15 acres. A distributor, Lone Tree Foods (http://www.lonetreefoods.com/…), delivers produce, meat and cheese products from these farms to grocers in Omaha and Lincoln, Nebraska, as well as to more than 30 restaurants in the region. While grocery demand is strong, most of the restaurants are closed, though a few are trying carryout service.
Roh noted a lot of the smaller produce farmers are wondering whether the farmers markets will be open later this spring.
"Myself and every other farmer I've talked to, we're planting just assuming that markets and regular stuff are going to start," Roh said. "That's really kind of the gamble we're taking now. We're going to have a bunch of stuff ready to go, but if farmers markets don't open up, we'll be leaving that stuff out in the fields."
The farmers markets play a large part in Roh's business and other similar produce farmers because they can charge twice as much for fruits and vegetables as they get selling the same products wholesale to grocers.
"You are now working on the very low end of everything without those markets in there," Roh said. "That is kind of the bread-and-butter for us."
Roh had looked into Small Business Administration loans and a new $10,000 SBA grant program, but the grant excludes agricultural operations. He didn't realize there was potential aid in the new stimulus bill.
"I wouldn't even know how you could start going down the line saying this is how much money we could give to each farmer here," Roh said. "There are way too many variables in all of that out there."
Others who sell at farmers markets are seeing sales pick up from other avenues. Mariel Barreras, co-owner of Barreras Family Farm (https://www.barrerasfamilyfarm.com/…) near Blair, Nebraska, sells beef, pork, eggs, honey and soaps to local stores, as well as raw goat milk on the farm. Barreras said sales have increased, especially for products such as eggs going to area Hy-Vee stores.
"The distributors for eggs coming out of state, they actually stopped so they (Hy-Vee) increased the quantity they were needing from us because they could get them so quickly," she said, adding that beef and soap sales also have spiked online.
Barreras runs the marketing and daily routine on the farm just north of Omaha while raising eight children, ages 16 years to a few months old, while her husband, Anthony, an Army lieutenant colonel, is currently stationed in Kansas. She said the kids are being raised to be full partners in the operation.
Barreras said one of the keys for her farm is selling to grocers, as well as online sales and farmers markets.
"I think diversification is the key, and we've been doing that for years," she said.
Leon Svoboda, owner of ELTEE Mangalitsa's (https://www.elteemangalitsas.com/…) near Pender, Nebraska, raises the heritage Hungarian mangalitsa breed hog with his wife, Tami. They sell pork products at a farmers market in Omaha, as well as through a distributor.
"Things have changed for a lot of people, that's for sure," Svoboda said.
The farmers market has been the primary sales driver for Svoboda's farm as they had slowed down shipping because of higher costs. The couple also had been a little overwhelmed because of the demand. The farm sells through a distributor that then sells online and to retailers. Since the pandemic really hit home with Americans, Svoboda said sales of lard from the pork have gone up dramatically.
"Our lard sales have gone crazy," Svoboda said. "I don't know the reason for it. I think most if it is being sold online. Our meat sales haven't changed at all for us because of the virus. More families, because they are staying at home, they are cooking at home, so they are buying more meat from the grocery stores and things like that."
Svoboda is watching for announcements on the farmers market, but he's also looking to see what other ways could boost sales.
"We're trying to think of some new options that we might implement, I guess, if the farmers market doesn't happen this year," Svoboda said. "We're trying to come up with some ideas."
GROUND BEEF IS KING
Beef producers who market direct have seen a jump in local sales and online as well. Aaron and Deb Gress, who raise cattle near Charter Oak, Iowa, (https://www.gressfarms.com/…) sell mostly local beef in and around Denison, Iowa, but the couple also ships to customers in the state. The family started offering free local delivery recently, and that has helped drive more business. March sales were as much as three times higher than a year ago.
"We have a lot of people who like the fact we are bringing beef directly to their door and are just hearing about us and wanting to try home-raised beef," Deb Gress said.
Luke Jacobsen, who operates Range West Beef (http://rangewestbeef.com/…) out of Marquette, Nebraska, said his overall sales have increased for grass-fed beef even though his operation lost some business to institutions, such as University of Nebraska sororities that shut down for the school year. Ground beef sales, in particular, have gone up, Jacobsen said.
"It's a staple and people wanted to fill their freezers and really stocked up on ground beef," he said.
Jacobsen's beef business has lost some sales from people who had ordered a quarter or side of beef but had to cancel the orders because they have lost their jobs.
Jacobsen said he is concerned about the health risks that could come from big crowds at farmers markets once they open. He has had some direct sales where he sets up to meet buyers in a couple of locations in Lincoln and brings them their orders.
"You get pretty conscious about having a crowd, but people have been very good about spreading out and distancing themselves so far," he said. "Everybody is pretty cautious nowadays, and I think they are pretty much on board."
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
Copyright 2020 DTN/The Progressive Farmer. All rights reserved.