January 7, 2005
“MORE TENNESSEE FARMERS ADD VALUE BY DIRECT MARKETING”
In a recent evaluation of the 2002 USDA Census of Agriculture data, Specialists from the Center for Profitable Agriculture found that the number of Tennessee farmers participating in direct farm sales to consumers increased by 698 farmers between 1997 and 2002.
“This 25.9 percent increase in the number of Tennessee farmers involved in value-added agriculture through direct marketing was paralleled by a 34 percent increase in the total value of agricultural products sold directly to consumers” said Rob Holland, Extension Specialist with the Center. “That is, in 1997, the value of agricultural products sold by Tennessee farmers direct to consumers was $8,380,000 and in 2002 the value was up to $11,227,000.”
“In recent years, more Tennessee farmers have been interested in considering new enterprises, activities and procedures to generate income” added Amanda Ziehl, Marketing Specialist with the Center. While Tennessee agricultural production generated some $1.9 billion in 2002, each of Tennessee’s 87,587 farmers generated an average net cash farm income of $4,185. While a net cash income in 2002 of just over $4,100 may be considered extremely low, it is up from $3,446 in 1997.
Holland and Ziehl have summarized their findings in a CPA fact sheet titled “Signals of Success” which can be found on the Center’s web site http://cpa.utk.edu/pdffiles/cpa107.pdf
From a national perspective, the Census shows that the value of agricultural products sold directly by farmers to consumers in the U.S. increased from $591.8 million in 1997 to $812.2 million in 2002 which is a 37.2 percent increase. Over the same period, the number of farmers selling directly to consumers increased by 5.5 percent. The 2002 Agriculture Census also reported that 81 Tennessee farms generated $637,000 in sales of certified organically-produced commodities.
While the number of Tennessee farmers marketing directly to consumers has increased in recent years, not every farm operation can be successful at it. “Even though direct marketing allows farmers to obtain a larger portion of consumer expenditures, more than just a commodity is needed to be a successful value-added enterprise” said Ziehl. “We, in the Center, have found that developing a marketable product is essential for value-added enterprises – but not sufficient enough to alone lead to success.”
“Getting products to the market, selling a large enough volume at a price high enough to turn a profit is what value-added entrepreneurs face as they move from an idea to a profitable venture. Technology, risk, markets, regulations and capital are all keys to success, but it is ultimately about people – people who develop and deliver products and people who demand products” said Holland.
Since 1998, the CPA has been developing educational resources and tools to assist farmers and agri-entrepreneurs in the evaluation and development of value-added ideas. In addition, Specialists in the Center work everyday developing analyses and plans for Tennessee farmers with specific value-added ideas. The Center’s educational materials are not developed as step-by-step guides to success.
“We have found no such ‘cookie cutters’ or ‘recipes for guaranteed success’ exist” added Holland. “Many of the educational resources developed by the Center are not intended as how-to guides on starting value-added enterprises. Rather, most of our educational materials provide guidelines for evaluating available resources in comparison with market needs.” Some resources help stimulate ideas and assist in identifying unique factors behind successes and failures of other businesses. Direct marketing has been identified as a successful and sustainable alternative marketing method for traditional commodity markets.
All of the educational resources developed by the Center are available on the Center’s website at http://cpa.utk.edu.
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Contact: Rob Holland or Amanda Ziehl
Center for Profitable Agriculture
University of Tennessee Extension
931-486-2777
cpa@utk.edu
http://cpa@utk.edu
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