Academic journal article
By Brown, Cheryl; Gandee, Jesse E.; D'Souza, Gerard
Journal of Agricultural and Applied Economics , Vol. 38, No. 3
To understand the factors that influence farm direct marketing, a linear regression model is estimated to test the relationships between county-level direct market sales and socioeconomic, agricultural production, and location characteristics for West Virginia. The results show that higher median housing value, increased population density, a younger population, a greater number of direct market farms, more diversity of fruit and vegetable production and closer proximity to Washington, D.C., increase direct market sales. The results have implications for other states with a large proportion of small and pan-time farmers, many of whom are located in close proximity to metropolitan areas.
Key Words: direct market sales, direct marketing, farm sales, farmers' market
JEL Classifications: Q13, C21
Consumer demand for fresh, local food products along with the potential for increased farm income have led to an increase in direct marketing of farm products. In the United States, sales of agricultural products from the farmer directly to the consumer increased from approximately $592 million in 1997 to $812 million in 2002, and the number of direct-market farms increased from 110,639 to 116,733 over the same period (NASS 2004). The number of farmers' markets, an important direct-market venue, also increased from 1,755 in 1994 to 3,706 in 2004 (AMS 2005). West Virginia, the study area, has followed this trend, with the value of direct sales of agricultural products increasing from $2.9 million in 1997 to $4.6 million in 2002, and the number of farms selling directly to consumers increasing from 1,303 to 1,434.
West Virginia is a rural state whose agriculture is largely comprised of small family farms. Ninety-five percent of West Virginia farms are family-owned and operated, and farms with annual sales of less than $50,000 accounted for 95% of all farms in 2002 (NASS 2004). At an average of 172 acres, the land base for the state's farms is small compared to the national average of 441 acres (NASS 2004). While this high density of small farms in West Virginia preserves its rural character, it also means few farm families can take advantage of the economies of scale that make extensive agriculture viable (Steele). Preserving the state's agricultural base requires an attention to enterprises that are feasible on a small scale, such as fruits, vegetables, and other high-value alternative crops along with direct-marketing strategies that allow farmers to capture a greater share of the consumer's food dollar.
There is considerable research on the consumer characteristics that influence farm direct marketing. Much of the research has found that the typical consumer who purchases from a direct-marketing forum is well-educated, upper-middle class, middle-aged, and resides within a suburban area (Gallons et al.; Kezis et al.; Lockeretz). Consumers choose to purchase directly from farmers for multiple reasons, such as quality and variety of available produce and a desire to assist local farm owners (Brown 2003a; Eastwood, Brooker and Orr; FPC; Govindasamy and Nayga; Henneberry and Agustini; Kezis et al.; Schatzer, Tilly, and Moesel; Wolf).
Unlike the consumption or demand side, previous research relative to farm or farmer characteristics that influence direct marketing of farm products is limited. Gale claims that small farms (<$10,000 annual sales), fruit and vegetable growers, and farms near metropolitan areas are more likely to sell directly to consumers, and that prices received can be significantly higher than wholesale and competitive with retail. Lyson and Guptill found that the type of crop grown on farms influences what they describe as "civic agriculture," which is characterized by more directmarket sales and a greater connection to local markets. In particular, civic agriculture farms are more likely to be fruit and vegetable farms. A Mississippi study (Morgan and Alipoe) concluded that fruits and vegetables were important for direct marketing, finding the amount of vegetable and melon acreage increased the number of pick-your-own operations, farm stands, and farmers' markets in a county. …