By Chris Holman, Co-Owner/Operator of Nami Moon Farms
As beginning producers, what sorts of obstacles do we create in order to keep doing what we’re doing? There were plenty of them, but today let’s talk about one that will kill you and your farm faster than almost any other—price.
When we started out at Nami Moon Farm, we had no boots-in-the-mud experience, so we had to look around and assess the market to arbitrarily choose where our products fit, price-wise. That can be tough, as the value that I place upon my personal approaches may be higher than the market will bear. What’s more likely, though, is that a farmer will under-value the practices, philosophies, labor, and the costs of production in the price of one product or another. It is truly insidious in our lives as farmers, and we are all guilty of it.
Just last Saturday, a young man approached our booth at one of our farmers markets and subtly bragged about the genetics in his pigs. He was combining Red Wattle with Mangalitsa and possibly some others, as he was focused on finding a Land Race hog for Wisconsin farms. Laudable goal, no doubt. But then he confided that he was about three days away from having 13 sows farrowing with no home for the feeders. He was offering them up for $40 each, “in order to get rid of them quickly.” I can appreciate that approach, and you see prices get lowered all of the time when a farmer can’t move his or her product. One could chalk that up to cash flow, I suppose, if it is a break-even price. Even if that were the case, though, there are a couple of issues with this method.
First of all, $40 is about $60 below the market price for a heritage breed feeder pig. You’d think that even doubling his price to $80 would move them quickly since there would still be some savings there for the buyer. Why wasn’t this young man willing to charge more? He’s volunteering to lose another $4,000 that he could bring in if he sold them at $80 each—a 20% discount! If his genetics are what they say they are, he should be charging even more.
Secondly, and a problem that quickly extends to other operations, he is helping create a price expectation that is lower than the original market value. If people start seeing him selling $40 feeders, he will definitely move them, but other people will get grief for charging what the feeder pig is actually worth. If his price is really popular, he might stick with it long enough that soon he’s raising more and more sows and selling more and more feeder pigs at this depressed price. That can pull the market down and affect everyone. We already see this occur elsewhere in the food economy, but here’s a beginning farmer with good intentions and the ability to avoid undermining other farmers by making the same mistake.
Farming production occurs on an annual basis in most places. If you only break even on your early production, you can’t profit on it until next year – a long time to wait for better profitability. Starting a farm business is even more difficult, so producers should charge an appropriate price as soon as possible and make sure that they and their customer are both benefiting from the business relationship. They should also find the strength to ‘fire’ customers when the relationship doesn’t benefit both parties. There’s no reason for to maintain an irrational and destructive business relationship, which is especially true if the farmer and customer are friends outside of work. It’s easy to get desperate at times because direct marketing and niche production are not always friendly. But when you choose your prices, you need to figure out how that translates into a market equilibrium for yourself, your farm, and your customer base. That will be different for everyone.
So, what’s the moral of the story? We need to take ourselves more seriously as farmers. It’s easy for beginners to think that we don’t deserve a better price, but if we’re direct marketing and in niche production, then chances are good that our product is worth every cent. In a world dominated by conventional commodity production, it’s easy to feel like we are too small to matter or that our share of production is not significant. Plenty of people will tell you that you’re not “feeding the world.” We need to remind those folks that every farm started somewhere, and the growth in farming right now is in smaller-scale production. In fact, the future of farming in many ways hinges upon many of us finding out how to replace the mid-size farms that are disappearing in droves. Let’s also not forget that there’s incredible demand for what we do. We just have to work harder to show that this is the case, and that starts with setting the right price for now and evolving that price along with your farm and your customers.
Chris and Maria Holman own Nami Moon Farms. Chris is a past participant in the National Farmers Union Beginning Farmers Institute and presently serves on the NFU Next Generation Advisory Council.
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Lots of great points. Most consumers understand that they’re going to be paying more at a local farmstand that can’t compete with grocery store prices, but there’s still plenty that will compare and complain.