The Financial Performance Implications of Differential Marketing Strategies: Exploring Farms that Pursue Local Markets as a Core Competitive Advantage

Allison Bauman,Becca B R Jablonski,Dawn Thilmany Mcfadden

doi:10.1017/age.2017.34

Allison Bauman, Becca B R Jablonski + Show 1 more

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https://doi.org/10.1017/age.2017.34

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Abstract

This study explores how participation in direct and intermediated marketing channels and key operational factors influence agricultural producers’ financial performance. Accordingly, we divide the sample of local and regional food marketers into quartiles segmented by profitability performance as an initial exploration of how strong and weak performance may vary across scale, location, and choice of direct and intermediated channels. Moreover, other financial metrics that vary across types of producers and performance-based quartiles are analyzed. This paper provides initial evidence that participation in direct and intermediated markets may allow farms of any scale of sales volume to be financially viable.

Highlights

Research and LiteratureStructure of U.S FarmsThe U.S Department of Agriculture (USDA) has a long history of tracking the structure of U.S farms, and there has been a consistent trend towards a bimodal pattern. Hoppe (2014) reported that small family farms make up 90 percent of the U.S farm count but produce a 26-percent share of farm output, whereas midsize and largescale family farms account for eight percent of U.S farms but 60 percent of the value of production
The USDA has a long history of tracking the structure of U.S farms, and there has been a consistent trend towards a bimodal pattern
Through our analysis of USDA Agricultural Resource Management Survey (ARMS) data, we explore differences across the share of production costs invested in labor as one potential proxy for customer service, given pilot studies demonstrating the essential role of labor in managing responsive supply chains in these marketing channels (LeRoux et al 2010)

Summary

Introduction

Research and LiteratureStructure of U.S FarmsThe USDA has a long history of tracking the structure of U.S farms, and there has been a consistent trend towards a bimodal pattern. Hoppe (2014) reported that small family farms make up 90 percent of the U.S farm count but produce a 26-percent share of farm output, whereas midsize and largescale family farms account for eight percent of U.S farms but 60 percent of the value of production. Hoppe (2014) reported that small family farms make up 90 percent of the U.S farm count but produce a 26-percent share of farm output, whereas midsize and largescale family farms account for eight percent of U.S farms but 60 percent of the value of production Despite their modest share of farm output, small farms operate half of U.S farmland and play key roles in several. Hoppe and MacDonald (2015) provide two key elements of how these small-scale operators are able to remain in business given the large number in the OPM critical zone: (1) undervaluing operator labor and (2) receiving substantial off-farm income. We posit another potential factor: choice of marketing channels

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