The term ‘farmgate sales’ describes a marketing method whereby farmers sell agricultural produce – mostly food – directly to the consumer, to restaurants and caterers, and to independent retailers. Farm gate sales are a common type of marketing found throughout traditional small farming sector worldwide and, in some countries, accounts for the vast amount of sales as far foodstuffs and livestock are concerned.
Contents
Characteristics
As the name implies, farm gate sales is a marketing strategy undertaken by the producer near the location where the product is produced. Consumers come to the production unit or farm to buy produce and, in some cases, pick the produce themselves. Examples include the sale of vegetables from a producer’s garden, the sale of eggs from an egg production unit, the direct sale of livestock from a ranch, and pick-your-own berries, fruits, and flowers operations. In general, there is no limit to the type of items that can be marketed in this manner as long as there are willing buyers and local ordinances permit such sales. Sometimes, a very limited number of intermediaries are situated between the farmer and the consumer ( see also short food supply chains). Generally, wholesalers and retailers are by-passed, and revenue received from the sales contributes immediately to a farm’s income.
In terms of social goals, farmgate sales helps to build a direct relationship between the farming community and consumers as well as fostering respect for food and awareness of how it is produced by consumers. It can also contribute to budget savings by consumers (see also potato movement).
In environmental terms, farmgate sales shorten transport distances and are expected to reduce food waste.
Sales methods
Farmgate sales are most common in the form of either retail outlets on the farm itself in a farm shop, roadside farm stands, or in market stands run by farmers at Farmers' markets or food fairs. However, other distribution channels are also used such as door-to-door sales and distance selling – so called ‘box schemes’ – where farmers take orders by telephone, mail order or via the internet. Also practised are ‘pick-your-own’ schemes where farmers invite consumers to pick their own fruit and vegetables U-pick.
Challenges
A main challenge for farmgate sales lie in ensuring compliance with food law (e.g. hygiene rules and labelling requirements) as well as consumer law (information requirements and, at times, the consumer’s right to withdraw from a contract of sale). This complex regulatory environment can be difficult to handle for farmers not trained in these areas.
Regulations
Under the heading of “Product of my farm” the European Commission has started to take an interest in promoting farmgate sales and is contemplating a policy which would encourage farmers to engage in direct marketing schemes for their produce. A specific labelling scheme is in development as the so-called “Quality Regulation” – Art. 55 of Regulation (EU) No. 1151/2012 on quality schemes for agricultural products and foodstuffs – required a study on the benefits of a ‘farmgate label’ to be completed until 2014. This study was presented on 6 December 2013 (Commission fosters debate on potential‘local food’ labelling scheme: http://ec.europa.eu/agriculture/newsroom/150_en.htm) (Local farming and direct sales: http://ec.europa.eu/agriculture/quality/local-farming-direct-sales/index_en.htm) but remains non-committal toward the launch of labelling scheme rather relying on existing tools to promote farmgate sales (http://eur-lex.europa.eu/LexUriServ.do?uri=SWD:2013:0501:FIN:EN:PDF). On short food supply chains also see the website on organic farming (http://ec.europa.eu/agriculture/organic/consumer-trust/certification-and-confidence/short-supply-chain/index_en.htm). In North America, provincial regulators are beginning to take an interest in farmgate sales and create rules to facilitate direct sales from farms.