Why Most Farmers Don’t Want to Jump into Niche Markets

If I have heard it once, I’ve heard it a thousand times. 

“Why wouldn’t farmers want to grow (organic/natural/hormone free/random other stuff), people want it, and the farmers can make more money growing it.”

Here are a few reasons (right or wrong) why Farmers hesitate to jump into these niche markets. 

1. Farmers are a practical bunch. We often don’t think in terms of “why not, if we would make more money”, but more like “Why would anyone pay more ‘A’, when ‘B’ is just as healthy, safe, and delicious.” 

We have a very close relationship with the food we produce, no matter what kind of food it is. Whether it is grains, oilseeds, vegetables or meat that we grow, we spend the better part of a year nurturing it, worrying about it, and praying over it. Our profession isn’t one where you go home after 8 hours and turn off your brain. Every waking minute is spent planning on how to get the best possible growth, the healthiest crop and herd, while leaving the land in the best shape it can be in to do it all next year. After all of that, we proudly serve what we have grown to our family and friends at our kitchen tables. I promise you that I can better tell you how safe or healthy the meat we produce is, infinitely better than any fancy marketing team. 

In a farmer’s practical mind, why would he/she work harder and spend more money growing something that someone somewhere thinks might be better, when you know that what you already grow is completely awesome!

In other words, just because someone will pay more money for it, doesn’t make it right. 

2. Farmers have heard before that they will make more money. Sometimes it actually happens, sometimes it doesn’t. As long as there have been markets, there have been niche markets. One of the main reasons there are small, directed markets for any specific product is that there are significantly larger costs for producing that product. If it was really that easy, everyone would be doing it, and it would no longer be a small market. 

For example: We have raised and finished both conventional beef, and hormone-free “natural beef”. Cost of gain (the cost of producing each pound of beef) depends largely on feed prices at any given time, but if conventional cost of gain is $0.80/lb then hormone-free could be around $1.00/lb and organic beef could be as high as $1.50/lb. Natural beef premiums we have experienced in the past have been anywhere from $0.05 to $0.25. Raising natural beef involves quite a heavy load of paper-work, not to mention the extra work of feeding cattle different rations, and for longer. A twenty five cent premium may sound attractive, but not so much after you’ve taken time to consider your true costs. Top that with a fairly unstable market, and you may do all that work for one year, only to have your premium shrink or disappear altogether the next year. 

3. Fads come and go. Dairy used to make you fat, then it was carbohydrates. A great friend of mine owns the SaskMade Marketplace. She says that 4 years ago everyone came in looking for organic. Now the ask is always for gluten free. Going into a new production system always takes significant time and money. How sure can farmers be that this new one is going to last? 

4. Niche markets lack standards. Many of these small markets lack a standard set of rules that must be followed around the world. A prime example of this is the organic markets. While Canada has fantastic rules and standards that must be followed, the same cannot be said for organic food everywhere. There isn’t much more disheartening than seeing the organic flax that you poured your heart and soul, time and money into, only to have the market tank because China shipped literally boat loads of organic flax into North America. Especially when you know their fields were probably never inspected, and if they were, well, who knows what palms were greased along the way. 

A&W calls their beef “sustainable”, but what does that mean? There is no set standards around calling any beef from anywhere “sustainable”. In Canada, they ship much of their beef in from Australia. How “sustainable” is that? Compare that to McDonalds, who have been working together with environmental, government and beef producer groups for YEARS, to gather information and come to a consensus about what sustainable beef actually looks like. 

These huge gaps in standards make it very difficult to put your farmer stamp of approval on any given niche market. 

5. Farmers hate having all their eggs in one basket. By definition, niche markets are small. This means there are much fewer companies to sell your product to. This means the farmer carries a much greater risk. 

There have been instances of hauling grain to small companies, only to have them fold into bankruptcy before you get paid. Also, If there is only one company that buys product X and you want to sell your Product X in September, you better hope they are buying then. Farmers like options. Lots of options. 

6. Change sucks. Although present day farmers are more progressive than ever, there will always be a lingering fear of change. We are only human after all. When things are going well on your farm, there are few farmers that would be willing to completely change their production system. What farmers are doing on their farms today is a result of many years, sometimes even generations, of small steady changes and adjustments. To take your entire system, and turn 90 degrees in an entirely new direction is a difficult step for anyone. 

But….

All this being said, farmers do take leaps into new directions all the time. They try new crops and new systems. Sometimes it works well for them, sometimes it doesn’t. This post isn’t meant to convince any farmer not to try a new market, but rather to help an average person understand why farmers don’t always produce what you think you want at any given time. 

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