Last month, researchers in the United States published a study examining direct selling and local food economies in the Midwestern United States.

Lead author Professor Amit Sharma of Pennsylvania State University found that farmers supplying local restaurants and shops not associated with large chains could incur extra costs associated with marketing, transportation, and tighter selection criteria on their produce, though he said that those "who really made a conscious decision to sell local and who made more of a commitment tended to do better… with local, direct selling."

In the past, a variety of studies have shown that such selling patterns can potentially strengthen local economies, keeping money circulating for longer within communities and providing cost benefits for both producers and consumers. Although Professor Sharma discovered a range of benefits associated with this "different channel of selling", he also identified some potential pitfalls, but urged farmers not to let "new costs weaken their commitment to the novel venture."

image expired

Penn State researchers interviewed farmers selling food to a local market in the Midwestern United States. Most of those who participated were small farmers, including a number that were "very small," according to Professor Sharma, as well as two running larger businesses. The professor added that, contrary to common assumption, the smaller farmers were generally more anxious about making commitments to sell direct.

Prior to the study, most farmers interviewed already sold locally at farmers markets, though many were also involved with large wholesalers as part of longer, more complicated supply chains, sometimes supplying to larger retailers.

Although they identified definite benefits associated with direct and local selling to businesses within a community, researchers said the overall picture developed by their study was quite complex. Whilst some farmers found direct selling more convenient, others found that restaurants and other local retailers had higher quality requirements than larger buyers and in some cases local buyers wanted discounts from their suppliers.

Research identifies hurdles

Professor Sharma and his colleagues found several issues associated with 'going local' had deterred some of the farmers questioned, but that obstacles were always surmountable for those willing to persevere. One such chore was creating a web presence, an idea at which many farmers baulked.

However, in the United States at least, many farming organisations, extension units, and state agencies host websites with templates that producers can use to market their products. These organisations often use grant money to make the templates available for free.

Speaking to Farming Online in April, Professor Sharma added that the major difficulty identified during the research was that most farmers and restaurateurs did not know where to begin selling or buying direct. Farmers looking to trade within their communities did not know which businesses would be prepared to trade, or how to approach them, and retailers had difficulty spreading the message that they were willing to buy direct.

The professor concluded that, "what seems like a simple problem was actually a big challenge," but offered examples of a number of ways around the "baffling gap in communication." He said the internet could prove an invaluable resource in this case and that some regions have groups which can initiate contact between farmers and prospective buyers, though he explained that, in his experience, websites and organisations set up to make the connection have sometimes met with limited success.

Prof Sharma added that, ultimately, one partner must act in order to get the ball rolling. He said, "It's good that the information is there, but someone still has to go looking for it. The challenge is still getting these two populations, for want of a better word, connected."

Nevertheless, direct selling and local food has enjoyed something of a renaissance around the world. From the United States, where the number of farmers markets has increased by 450 percent since 1994, to Greece, where farmers responding to the crisis have opted to self-organise and sell direct to their local communities, and France, where an estimated 100,000 of the country's 490,000 farms sell at least some of their produce direct and some have begun selling local delicacies online.

Although extra time and effort needs to be put into developing local supply chain relationships, farmers can often recapture additional revenue through higher prices and improved sales margins. Iowa State University's Catherine Strohbehn, who was also involved in the research, said this is especially true in businesses such as local restaurants where, "Local foods are valued by chefs because of the relationships that are formed; the chefs know where and how the product is grown or produced and they trust the farmer."

Although he agreed to an extent, Professor Sharma said this was not always the case. Some retailers who engaged in direct buying chose to look to local suppliers for other reasons than prestige or profit and did not pay or charge a premium for their products.  

Community benefits intangible, but important

The Penn State Professor explained that, as well as increased custom for some as a result of selling locally, becoming more recognisable in a local community and developing a sense of Pride at selling themselves what they had worked to produce also carried benefits. He added that this is "something as a buyer that you want to see; a direct connection with the producer is something more than just a label [on your food]."

He added, "There may be more transparency in selling this way, but for the farmers and restaurants the main thing was a sort of prestige" born of mutual association. "It was the relationship building directly with consumers; in a market or in the community, they would be recognisable."

The direct relationship also proved more responsive, meaning farmers and buyers were more attuned to consumers' desires. Sharma concluded that, out of the complex picture his research produced, he "Definitely found that word of mouth played a role in benefitting farmers."

He continued, "There can be benefits – I can't say that across the board – but what makes it better for farmers is that it's a new, different channel of selling. There can be rewards, but it's necessary to establish what is going to work and what isn't. The principal that businesses must know their market is also true in direct retail foodservices sales."  Professor Sharma concluded, "There's a status quo that exists and it's often difficult for farmers to get out of that mindset."

Professor Sharma's study is published in the March edition of the Journal of Agriculture, Food Systems and Community Development.