Direct Farm Marketing in Ontario - A Primer


Factsheet - ISSN 1198-712X   -   Copyright Queen's Printer for Ontario
Agdex#: 846
Publication Date: February 2011
Order#: 16-025
Last Reviewed: August 2016
History: Replaces 11-011
Written by: Originally written by Dorene Collins - Marketing and Customer Service Program Lead/OMAFRA. Revised by Jessica Kelly, Direct Farm Marketing Program Lead and reviewed by Erica Pate, Acting Direct Farm Marketing Program Lead.

Table of Contents

Introduction

Direct farm marketing requires being much more involved in the marketing and sale of a product to the end user - the consumer - than conventional primary production agriculture. Unlike traditional methods of selling products, such as wholesale into the marketplace, direct farm marketing allows for greater control by the producer into the production and selling of a product, including the ability to be a price maker - not a price taker.

Forms Of Direct Farm Marketing

Producers taking the direct farm marketing route have the opportunity to choose the type of operation they wish to pursue based on their product mix, skills and market access.

The most popular types of direct farm marketing include:

  • on-farm activities such as roadside stands, farm markets/shops, pick-your-own operations and community-supported agriculture (CSA)
  • off-farm activities such as being a vendor at one or several farmers' markets or selling through online sales and direct delivery.

On-Farm Activities

Roadside/Farm Gate: An entry-level approach to direct farm marketing involving little capital investment. Roadside/farm gate sales can be as simple as a wagon or as elaborate as a small shed located at the end of your driveway.

Farm Store/Market: The types of farm store/markets range from seasonal to a full-functioning, year-round country store offering consumers an alternative to the supermarket. Success often depends on good research into the local market, products and ways to develop customer loyalty.

Pick-Your Own: These were very popular in the 1970s; however, volumes picked at pick-your-own operations have declined over the years. As a result, those remaining have become unique and different in order to capture value. Many have added "edutainment" or agri-tourism targeting school groups and families or have expanded into special interest markets such as corporate picnics, film companies, etc.

Community-supported agriculture (on-farm pick-up or delivery): In basic terms, CSA consists of a community of individuals who support a farm operation, sharing the risks and benefits of food production. Members or shareholders of the farm or garden pay a fee in advance of the growing season to cover the anticipated costs of the farm operation and the farmer's salary. In return, they receive shares in the farm's bounty throughout the growing season, as well as satisfaction gained from reconnecting to the land. Members also share in risks, including poor harvest due to unfavourable weather or pests. CSA shares are often provided weekly throughout the season, either by delivery or pick-up at the farm. Some CSA operations have captured more value from shareholders by expanding to other products (e.g., meat, eggs, storable produce, preserved food products) or extending their season, some even year-round.

Off-Farm Activities

Farmers' markets: There are over 200 farmers' markets in Ontario. They have experienced resurgence in popularity with interest in local food. Each market has their own rules for the types of vendors and products that can be sold. A full-season commitment to attend is often required from the producer. Farmers' markets offer the customer variety. Quality customer service and a community experience will build customer loyalty, bringing them back to your booth week after week. Many farmers' markets are seasonal, while some are year-round.

Online ordering: The use of online direct ordering is increasing. Some farms allow customers to order products through an online platform. This requires background research and development as well as some tech savvy. Online sales create an opportunity for customer loyalty not limited to time, space or geography. It's important to know your target market and product niche to help direct traffic to your online ordering options.

Getting Started in Direct Marketing: Participating in these activities requires having a marketing mindset and being committed to building strong relationships with consumers who want to buy directly from a farmer.

The first step is to understand the marketplace and the business skills required for starting and maintaining a direct farm market operation. Start by answering the following questions:

  • Do I or could I produce products that the consumer is interested in buying through a direct farm marketing channel?
  • Are my family and/or employees interested in having direct contact with the consumer on the farm property?
  • Is my farm property located near a population base or market large enough to support the direct farm marketing operation?
  • Do I understand the type of consumer to target for my direct farm marketing business?
  • What uses are permitted by the municipality and what building code and health and safety standards need to be met?
  • Are there any property tax implications from new uses on the farm?
  • What customer service strategies can I use to build customer loyalty?
  • Do I have interest and skills in the area of retail marketing and/or displays and storefront exhibits?
  • How will I create curb appeal and deal with parking and other infrastructure needs such as public washrooms?
  • How will I create a brand and image through displays, signs, product mix and landscaping? What do I want that image to be?
  • What is my risk management plan and incident reporting plan to deal with the unexpected, such as injury, fire or product damage and/or theft?
  • Do I understand the importance of developing a comprehensive business plan to ensure I have considered: finances, human resources, social responsibility, production/operations, marketing, succession planning, upgrades to buildings, etc.?

Current Marketplace Opportunities - Is There A Market For Selling My Product Or Service Directly To The Consumer?

In today's consumer-based and competitive marketplace, you must understand what the market wants, not what you think it should want. Ask yourself what the marketplace is looking for, rather than what you should grow or produce to make money. Learn to tell the difference between what a fleeting trend is and what will be a long-lasting product or service. With the recent consumer interest in local food, those who are currently operating a direct farm marketing venture, or are considering it, can benefit greatly by tapping into the right consumer base. Develop a marketing plan that will include conducting market research and analysis.

Direct Farm Sales - Know The Regulations

Direct farm marketing moves beyond primary production and wholesale marketing and is often referred to as value-added agriculture. Before investing in a direct farm marketing venture, be aware of what best management practices, applicable rules and regulations you will have to learn and adhere to.

Key considerations that may affect a direct farm marketing venture include:

Taxation

Moving beyond primary production agriculture to secondary activities or uses on the farm - such as retail, commercial or industrial uses - may result in a different tax assessment by the Municipal Property Assessment Corporation (MPAC).

Land Use Planning

Municipal official plans and zoning by-laws identify what uses may be placed where. Work with your local planning department to understand their requirements.

Signage

Directional and other types of signs advertising your business are important. Be sure to understand the sign by-laws within your local township county or municipality, as well as the required permits and regulations regarding signs and other commercial-related activities along provincial highways. The Tourism-Oriented Directional Signing (TODS) Program, offered through the Ministry of Transportation and Ministry of Tourism, Culture and Sport, enables and allows qualifying tourism operations to place their business signs along provincial roadways.

Retail Signage

If you are selling fruits and vegetables at the farm gate or a farmers' market, there are requirements for retail signage outlined in Ontario Regulation 119/11 Produce, Honey and Maple Products of the Food Safety and Quality Act, 2001.

Public Health

If the public visits, purchases a product or takes part in an activity on your property, local public health requirements may apply.

Food Safety, Service and Processing

Food safety regulations will apply to your operation if food service or food processing - such as on-farm snack areas or selling baked goods and/or preserves - is done on your farm. Work with your local health unit to ensure that you are aware of all food safety considerations.

Labelling

The Canadian Food Inspection Agency (CFIA) regulates food labelling under the Consumer Packaging and Labelling Act. Fresh fruits and vegetables are exempt, but most other food products require some sort of label. CFIA's online Food Industry Labelling Tool is a useful resource to learn what requirements apply to your food product(s).

Insurance and Liability

Farmers' markets have insurance; however, most vendors choose to have additional insurance coverage of their own. It is important to discuss your direct farm marketing plans with your insurance company. Especially if you are inviting guests onto your property, there are many potential risks and liability considerations.

Registering Patents, Trademarks, Copyright

In some cases, you will want to protect the value-added product or service developed to ensure its success in the marketplace and keep competitors at bay. Register your product and investigate which intellectual property options are most suitable, including trademark, patent and/or copyright.

Human Resources

The scale of your value-added business may require you to employ additional staff. In this case, you will have to comply with provincial and national employment regulations and standards.

Marketing Regulations

Adhere to marketing regulations when marketing agricultural and food products in Ontario, both domestically and for export purposes.

Conclusion

Developing and operating a direct farm marketing business in Ontario can be rewarding for you and your customers. The trust and interest in farming and local food is not a passing trend, and those that invest the time and energy will have the opportunity to benefit from this local food movement.

OMAFRA Resources

OMAFRA's business information: ontario.ca/agbusiness (search by title)

Subscribe to the OMAFRA Agricultural Business Update eNewsletter, access a list of farm business advisors and resources related to all aspects of farm business management, value-adding and direct marketing.

Beyond Production Agriculture Business Information Bundle

OMAFRA Factsheets - ontario.ca/agbusiness

  • Developing an Agri-Tourism Operation in Ontario
  • Preparing Business Plans
  • Developing a Marketing Plan
  • Customer Service Strategies that Work
  • Managing Risk on Farms Open to the Public

Direct Farm Marketing Business Resources

Look for information for partners about the use of the Foodland Ontario logo and access to Foodland's recipes and point-of-sale materials.

Selling Fruits and Vegetables at Farmers' Markets and at the Farm Gate (O. Reg 119/11)

Guidelines on Permitted Uses in Ontario's Prime Agricultural Areas

Foodland Ontario: ontario.ca/foodland

Industry Associations

Ontario Farm Fresh Marketing Association (OFFMA)

Farmers' Markets Ontario (FMO)

Ontario CSA Farm Directory

Other Resources

Agri-food Management Institute (AMI)

  • Resources related to human resource management and business planning.

Canadian Food Inspection Agency (CFIA) Food Industry Labelling Tool

List of Municipal Health Units

Tourism-Oriented Directional Signing (TODS)


For more information:
Toll Free: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca