Organic Farming in Poland as Example of Organic Farming in CEE Countries - from farm to plate", 25-29 July 2005, Warsaw and Culavia - Pomerania,
ENAOS 2005 - 4th ENAOS Summer Meeting

organised within the framework of the Avalon Network Project financed by

European Commision
Warsaw Agricultural University,
Faculty of Human Nutricion and Consumer Science,
Faculty of Agriculture and Biology
Dutch National Postcode Lottery Ministry of National Education And Sport
Chosen papers on organic farming


Role of direct sale in organic farming

Angelantonio D’Amario, Fabio Marzoli, Francesco Martino, Michele Morettini

Introduction

Organic agriculture has grown to be a worldwide multi-billion dollar industry over the past dozen years. This growth has been almost entirely consumer driven. Most organic crops command a higher price than comparable conventional food; the premium varies according to the commodity and market conditions. Consumers are willing to pay more for organic food based on a number of preferences: food safety, flavor, texture, and overall quality but also environmental protection, animal welfare and social concerns.

The growing demand and the premium prices have attracted many market operators like supermarkets and processors to enter into the organic business. In the most part of Europe development of organic market is due to supermarkets.

Not all the farms sell to supermarkets or shops. Sometimes there is not critical mass, sometimes there is no economic potential, and sometimes it is a matter of feeling. Supermarkets and direct supply are not antithetical, and are the two faces of the same coin.

Marketing channels

Historically, most organic food was sold through natural food stores and cooperatives. Organic food is increasingly distributed through mainstream channels to the point where the majority of organic food is now sold: through large supermarkets. Within the retail sector, some of the more rapidly growing chains have been stores that prominently feature organic food. Organic farmers have also relied heavily on direct marketing, particularly those that do not produce a volume sufficient for consistent supply to retailers.

Most successful small to medium-sized organic farmers will rely on a diverse number of marketing channels rather than rely on a single buyer. Organic farmers use farmers markets, on-farm sales, restaurant accounts in preference to wholesale as marketing outlets. Retail and wholesale distributors will often be used as outlet channels when available. Large farms tend to rely on advance contracts with processors and high volume retail sales. The largest farms are vertically integrated as packer-shippers, paralleling the conventional channels for distribution. Packer-shipper operations will contract with producers, particularly in cases where the producers can fill different market windows. With a growing number of organic food processors entering the market, an increased volume of purchases go through contracted channels. Spot market sales and terminal markets have been the least profitable outlets for organic farmers. With rare exceptions, these markets will not pay a premium for organic product.

Direct marketing

Marketing plans and strategies vary considerably among farmers. Many farmers sell a homogeneous product in a competitive market with many buyers and sellers. As a result, these farmers are price takers, that is, they can sell as much as they want at a given price. Their marketing challenge is that they often face a range of prices in a given marketing year. This price variability exists because of fluctuations in supply and demand throughout the year. Successful marketing for these farmers implies selling as much of their crop as possible in the high end of the price range. Other farmers sell products, such as vegetables, that are not as homogeneous. Their marketing strategy might be to differentiate the product to get a premium price. Organic food in this distinction behaves as products that can reach a premium price but farmers will have to organise their selling channels to get the premium prices. In the past many farmers converted to organic farming to get subsides of regulation 2078/92 even though they sold their products with no label in the non-organic market.

Agricultural marketing is a key component of any farm management plan. Although farmers must invest time and work to develop a successful marketing plan, the rewards may justify the effort. Probably those organic farmers that sold their products in the non organic market don’t continue farming organically because some aids are not available any more. Many farmers can increase their gross returns by selling directly to the consumer and assuming the functions of the various middlepersons or distributors. Moreover in this way they are able to sell to consumers that are willing to pay a premium prices for its organic features. The additional returns that accrue to the producer result from three factors:

  • consumers are willing to pay higher prices for certain real or perceived values;
  • many consumers prefer buying directly from the producer because of quality concerns, and
  • farmers may perform the middlepersons' function efficiently.

Direct marketing takes many forms. The most common is a roadside stand operated by the producer on or near his or her farm. Another variation of onfarm sales are pick-your-own operations. These operations significantly reduce labor in harvesting, sorting and grading of the products. For many farmers who are not located conveniently to consumers, farmers' markets can also provide access to retail buyers. Although revenues can be increased through direct marketing, there are additional costs. The products mentioned previously generally are labor-intensive. Many farmers are unable to provide the additional services necessary to market their products directly; therefore, extra sales may not justify the extra expense. Also, this strategy requires the farmer to be an effective salesperson. Successful salespeople cultivate their relationship with the consumer to ensure that customers return for additional purchases. In addition, the retail stand or pick-your-own operation is a separate business quite different from farming. Promotion, pricing, personnel management and product presentation are key factors in running these operations. The farmer must be willing to take time to learn and practice these skills to be successful.

 

Start

ENOAS Summer Meeting IV: Introduction | Organizers | List of participants | Meeting Plan | Lectures and presentation | Country presentation | Work groups | Excursions / Visits

Organizers; Warsaw Agricultural University (SGGW) | Faculty of Human Nutrition and Consumer Sciences | The Faculty of Agriculture and Biology | Education in organic farming at SGGW | Scientific Association of Agriculture Students - yesterday and today | Scientific Assiociation of Nutrition and Dietetics Students | ENOAS - European Network of Organic Agriculture Students - past, present and future | Avalon Foundation

Organic farming and market in Poland

Country presentations: COLOMBIA - General situation of organic agriculture in Colombia –organic food market in Colombia | HUNGARY - Situation of ecological agriculture in Hungary | ITALY - organic food market | SLOVAKIA – Ecological agriculture | FINLAND - Organic markets in Finland

Reports of visits: BIODYNAMIC FARM, Education Center of R.STEINER Foundation in Prądocin | ROLMIĘS | Bakery SŁODKA | FARM of THE KUJAWSKIS | FARM and MILL of THE BABALSKIS | BIOFOOD

Chosen papers on organic farming: Barriers of conversion into organic production | Barriers of conversion into organic farming | Barriers of conversion into organic farming  | Role of direct sale in organic farming  | Social aspects of organic farming  | Social aspects of organic farming  | Multifunctionality of organic farming in Slovak Republic  | Multifunctionality of organic farming | Multifunctionality of organic farming | Multifunctionality of organic farming  | Multifunctionality of organic farming

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