The profitability implications of sales through local food markets for beginning farmers and ranchers

Becca B.R. Jablonski, Joleen Hadrich, Allison Bauman, Martha Sullins, Dawn Thilmany

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

Purpose: The Agriculture Improvement Act of 2018 directed the US Secretary of Agriculture to report on the profitability and viability of beginning farmers and ranchers. Many beginning operations use local food markets as they provide more control, or a premium over commodity prices, and beginning operations cannot yet take advantage of economies of scale and subsequently have higher costs of production. Little research assesses the relationship between beginning farmer profitability and sales through local food markets. In this paper, the profitability implications of sales through local food markets for beginning farmers and ranchers are explored. Design/methodology/approach: The authors utilize 2013–2016 USDA agricultural resource management survey data to assess the financial performance of US beginning farmers and ranchers who generate sales through local food markets. Findings: The results point to four important takeaways to support beginning operations. (1) Local food channels can be viable marketing opportunities for beginning operations. (2) There are differences when using short- and long-term financial performance indicators, which may indicate that there is benefit to promoting lean management strategies to support beginning operations. (3) Beginning operations with intermediated local food sales, on average, perform better than those operations with direct-to-consumer sales. (4) Diversification across local food market channel types does not appear to be an indicator of improved financial performance. Originality/value: This article is the first to focus on the relationship beginning local food sales and beginning farmer financial performance. It incorporates short-term and long-term measures of financial performance and differentiates sales by four local food market type classifications: direct-to-consumer sales at farmers markets, other direct-to-consumer sales, direct-to-retail sales and direct-to-regional distributor or institution sales.

Original languageEnglish (US)
Pages (from-to)559-576
Number of pages18
JournalAgricultural Finance Review
Volume82
Issue number3
DOIs
StatePublished - Apr 22 2022

Bibliographical note

Funding Information:
This material is based upon research supported in part by the U.S. Department of Agriculture (USDA) National Institute of Food and Agriculture, and the USDA Economic Research Service. The authors have no financial interest or benefit from the direct application of this research. The funders played no role in the decision to submit the paper for presentation. The findings and conclusions in this presentation are those of the authors and should not be construed to represent any official USDA or U.S. Government determination or policy.

Publisher Copyright:
© 2022, Becca B.R. Jablonski, Joleen Hadrich, Allison Bauman, Martha Sullins and Dawn Thilmany.

Keywords

  • Beginning farmer
  • Direct sales
  • Farm Bill
  • Local food

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