If Direct-to-Consumer were a Commodity…

By Gary Matteson
May 30, 2014

Interpreting the stories told by the Ag Census data requires a healthy skepticism.  This begins with knowing the terminology that’s used so as to understand what is being measured, and consequently the limitations of what conclusions can be drawn.

For instance, what the Ag Census calls “agricultural products sold directly to individuals for human consumption” is pretty close to what I’d call the “direct-to-consumer” marketing channel.  This category of sales right off the farm would exclude crops like hay or nursery ornamentals, and would include local food sales from CSAs or farm stands (but would exclude local foods sold to intermediaries like food hubs or wholesalers).*

According to recently released 2012 Ag Census figures, the number of farms with direct-to-consumer sales increased, while at the same time the overall number of US farms decreased.  This means that the proportion of farms using direct-to-consumer marketing as a primary or supplemental marketing channel increased by about 5.5%.

Going back to the 2007 Census of Agriculture data, direct-to-consumer sales ranked 5th as an agricultural activity by number of farms.  For 2012, it moved up, and now ranks as the 4th most popular agricultural activity by number of farms.   In other words, if “direct-to-consumer” were a commodity (such as cattle or grains), it would be the 4th largest commodity as measured by the number of farms engaged in the practice.

While the dollar amount of direct sales stayed level with 2007, more producers sold through the direct-to-consumer channel, apparently thinking it a good way to diversify their marketing options.  Does this mean more producers divided a smaller pie of dollars?  That’s not clear.  The census only reports direct-to-consumer sales, not other “local” food sales like those made to wholesalers or food hubs.

From this national perspective, it seems that an additional 8,000 farmers thought direct-to-consumer sales was a marketing option worth trying (an increase of 8,000 farms reporting direct-to-retail sales activity from 2007 to 2012).  Recognizing the recession of 2008-09 and the lackluster economic growth since then, it makes me think that local food has held its ground well.

If local food were a fad, sales would have been expected to decrease more than they did given the overall lower consumer spending in a tough economy.  It can’t be proved as a certainty from Ag Census data, but I believe it’s time to compost the myth that local food is a fad.

Note: Unless cited otherwise, all data reported in this article is from the USDA’s 2007 or 2012 Census of Agriculture.

*”The Ag Census defines direct sales to consumers as the value of agricultural products sold directly to individuals for human consumption from roadside stands, farmers’ markets, pick-your-own sites, etc.  It excludes non-edible products, but includes livestock sales.  Sales of agricultural products by vertically integrated operations through their own processing and marketing operations are also excluded.”  Local Food Systems—Concepts, Impacts, and Issues, Martinez, Hand, et al; USDA Economic Research Service Report Number 97, May 2010, page 5.

About Gary Matteson
Gary Matteson knows agriculture first hand. Until recently he was a small farmer operating a greenhouse business in Epsom, New Hampshire. Matteson now works at the Farm Credit Council, the trade association for the nationwide Farm Credit System. He is an advocate for young, beginning, small, and minority farmer outreach programs. Matteson is responsible for spreading best practices for beginning farmer lending and training among Farm Credit Associations, generating new program ideas to benefit them. In addition to working directly with farm groups, Matteson is active in policy related to new entrants to farming. He now serves on the USDA Advisory Committee on Beginning Farmers and Ranchers.