August 16, 2011
Have you ever sat at the table after a long day of hard work on the farm and wished you could get more profit for the time and money that you have invested into your operation?
I would say that nearly everyone could answer that question with a yes.
There are many tools that exist to help to you become more efficient but you can only get so efficient.
Let’s take a look at a different way of thinking, and see if we can increase our profit by adding value to the operation in different ways. This can be accomplished in a number of different ways.
Thinking about how you market the existing products you produce is one place to start. Direct marketing to consumers can put more money in your pocket. However, it does take a different mindset than delivering your crop to the local elevator or livestock to the sale barn.
Direct marketing through farmers’ markets, roadside stand, on-farm stores or community supported agriculture (CSA) business models may be options for some products produced on the farm.
Research on consumer trends clearly shows that consumers desire to purchase locally grown or produced foods. Think about what you can produce that consumers are looking for.
Differentiating your product as something special or unique is helpful in capturing the local consumer market. There is increasing demand for grass-fed or pastured raised meat and poultry.
You may be already doing some of these things, but you may just need to portray the right image to attract customers.
Must know potential customers
Part of the challenge is knowing who your potential customers are. You shouldn’t expect to start out with a hundred head of finished beef and expect customers to be knocking down your door to buy it.
However, as has been the case on many farms, if you raise a good product and consumers find out about it, they will return.
There are cash crop farmers who have diversified their business and are no longer just taking the crops to the elevator. They are marketing them directly to the end user and it is working. This approach is not without its challenges but has the potential to put more money in your pocket.
Besides marketing of your existing products, another method of increasing profits is to add some kind of value by processing the product.
Instead of selling a side of beef that is based on sale of the live animal you can sell individual cuts of meat. This requires you to comply with another set of regulations, but is an option to make more money.
There may be other forms of processing that you can do or have done to what you produce to make it worth more.
When I get together with a group of farmers, the common challenges I hear often deal with the necessity of having off-farm income to keep the farm going and how the next generation doesn’t stand a chance of making a “go” at farming the way we do it now.
We have to begin to look at producing things differently and marketing them differently in order to make this work.
I believe this is especially important in the volatile markets seen today.
Commodities are experiencing a dramatic price increase, but who knows what the future holds. Only you can make changes is your operation.
Start now to think about what you might do differently to end up with more money for what you produce.
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