Reconsidering Wholesale

Direct marketing to consumers has long been a standard of small-scale, diversified farming in New England. Birthplace of the CSA (in the United States, at least) and home to vibrant farmers markets in both smaller and larger cities across the region, New England appears to the outside eye as a paradise for “alternative” ag. But while many farmers initially got into direct marketing as a way to get adequately compensated for their nonconventional growing techniques, it seems that these days, that solution is no longer delivering on its promise.

Many of my classmates at the Farm School (myself included) began this year thinking that as small farmers we would likely be marketing our products through either farmers markets or CSA—or a combination of the two. But after visiting many farms throughout the region and talking to growers, that marketing strategy no longer seems so inevitable. Both CSA farmers and those focused on farmers markets have told us the same story: their direct marketing sales are on the decline. Red Fire Farm, with locations in Montague and Granby, MA, has downsized the number of markets they do as reduced revenue makes certain markets no longer worth their time. Roxbury Farm, in the Hudson Valley, and Piccadilly Farm, in southern New Hampshire, have seen their CSA subscriptions drop off, particularly in the urban hubs (New York City and Boston, respectively) that used to provide enthusiastic support.

These farms offer different explanations for the shifting market dynamic they’re experiencing: people don’t want to buy vegetables at farmers markets anymore—they want to buy pizza; people aren’t cooking these days, so fresh produce doesn’t appeal; meal kit delivery services like Blue Apron accommodate consumer whims to a far more elaborate degree than CSAs are willing or able to do; everyone who wants a CSA share in New York or Boston already has one.

But whatever the reason, the short of the story is: these marketing channels aren’t working for many New England farmers like they used to.

So if not farmers markets, and not CSA, then what?

For Alex Vaughn, head vegetable grower at the Farm School, the answer is wholesale. This may seem like an obvious move (What’s the opposite of direct marketing?), but for many in the “sustainable” ag community, it goes against the image of what it means to be that particular kind of farmer. Wholesale was the thing that direct marketing was reacting against when farmers markets and CSA began gaining popularity around the turn of the 21st century. But responding to changing market conditions is key to the economic sustainability that enables any other kind of agricultural sustainability. According to Vaughn, that might require taking a new look at an old idea.

Vaughn isn’t the only one reconsidering wholesale’s potential. In a recent Farmer to Farmer podcast, Danya Tetelbaum described how her farm, Queen’s Greens, located in Amherst, MA, side-stepped direct marketing entirely. “In 2010, I believe we couldn’t have started a CSA and sold enough shares without really pulling from other people’s businesses,” she explained, and the farmers market in Amherst is notorious for it’s veggie saturation. So rather than fighting a losing battle, Tetelbaum and her partner Matt Biskup established a streamlined crop plan of mainly greens and herbs that they sell to a mixture of restaurants, regional distributors, retailers, and institutions. They call their marketing style “boutique wholesale.”

Hawthorne Valley, a diversified biodynamic farm in New York’s Hudson Valley, has taken the wholesale approach a step further by becoming their own wholesale clients. While they maintain a vegetable CSA, Hawthorne Valley moves much of its produce through a dairy, bakery, sauerkraut cellar, and farm store that effectively act as in-house middlemen, adding value to the raw materials produced by the farm and connecting them to customers. The value-added aspect of these businesses helps Hawthorne Valley recapture the direct marketing profit margin that they’d otherwise be giving up.

It’s this lost profit margin that make many farmers market and CSA farmers reluctant to turn to wholesale. But while wholesale prices are undeniably lower than what direct marketing can provide, wholesale accounts can also be lower maintenance. Time that would’ve been spent communicating with customers and manning markets can be diverted into growing more and better vegetables—especially if the farm works with a distributor to take care of deliveries, or arranges for clients to pick up their own orders, as Queen’s Greens does.

This tradeoff appeals to Vaughn. If he were starting is own farm right now, he would go the wholesale route: supplying vegetables to Chinese food restaurants and Asian supermarkets. “Selling to restaurants doesn’t have to be ‘froufrou’,” he says. “Normal people eat at Chinese restaurants. I love Chinese food, but the vegetables you get are often really sad.” Vaughn doesn’t think it should have to be that way. Plus, supplying restaurants and markets particular to a cuisine would allow him to focus his business on certain specialty crops. “I’d want enough variety to do a good rotation,” he says, but not so much that he couldn’t get his systems really dialed in.

For those getting into wholesale, Vaughn advises starting with restaurants. “Many institutional clients want to see a track record,” he explains, but restaurants may be willing to contract with a new farmer. And instead of seeking buyers for what you’re already growing, grow what buyers request. This means establishing relationships—and ideally contracts—before the season even begins.

In order to establish that relationship with a restaurant, Vaughn recommends familiarizing yourself with the menu. This means eating at the restaurant a number of times in order to understand the ingredients that they use, in what quantities, and how often. Once you feel you have a good sense of the restaurant’s habits, ask to speak with the head chef. Be targeted in your approach, inquiring about particular ingredients and whether they’re happy with their sources. If it seems like the chef would be interested in sourcing from you instead, show them your price list, and ask if they can accommodate your pricing. Vaughn says he would start his prices on the low end of the spectrum, but be forthright that those prices would evolve as his business grew and became better established.

If the chef agrees to your pricing, ask them to project their desired quantities for specific ingredients and set up a contract. From there, you can begin to draw up your crop plan.

Despite his enthusiasm for wholesale, Vaughn still believes diversity is important to success. “The more diversified your business is, the more stable your operation is likely to be,” he says. For many farmers who gravitate toward farmers markets and CSA for ideological reasons, a combination of approaches may be the best way to ensure the economic vitality of their farms. There’s no magic bullet—finding a successful business model is as much about recognizing your personal temperament and values as it is about understanding the regional market for your product. The quest for sustainability asks us to honor both.