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Case Study : Direct Sales & Food Safety

This case study explores the benefits and considerations for vegetable growers who might be considering direct sale of their produce to the public.

The case study is based on a real grower and their business situation to help explain how decisions are made.

A vegetable grower in Western Sydney was discussing their business decisions and Sales & Food Safetymentioned that they would make more money by selling their vegetables directly into the local community and at various farmers markets in the state.

This case study describes the issues and calculations the grower has to consider, in order to make good decisions about how to pursue a direct sales business.

Case Study - Direct Sales
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CASE STUDY : Direct Sales and Food Safety

Direct sales involves a farmer selling directly to the consumer at farmers’ markets, through a roadside stall, pick-your-own, at on-farm stores, via catalogues, the internet / email, to restaurants, or via Community Supported Agriculture (CSA).

Key Points :

Interest in Farmers Markets has increased in recent years. The introduction of the VFMA Accreditation Program, an initiative of the Victorian Farmers’ Markets Association supported by the Victorian government, ensures authenticity of producers.

This policy provides a solid basis of quality, integrity and fairness to all consumers. The program advocates best practice and celebrates the work of genuine farmers, specialty makers and farmers’ markets.

Decisions discussed in the case study include :

  • Selling at full margin - reducing supply chain costs

  • Value adding potential - As soon as you cut and/or further process your produce, you are likely to have to adhere to a different set of food safety regulations.

  • Selling ripe product - Direct marketing will allow you to sell ripe product, as it does not have to be harvested early to go through the supply chain.

  • New business component - Direct marketing as a new business component can spread the risk and may help to sell produce that has small external defects that are not accepted by the larger retailers.

  • Different financial profile - Direct sales of produce will result in a slightly different cash flow situation and more transactions with smaller customers. Will you make more money ?

  • Dealing with the public - Direct marketing involves getting direct feedback on quality and presentation – if you do not like dealing with people, it may not be for you.

  • Council planning and permits - If you intend to attend farmers markets that are located in different shires, you may need a separate set of permits for each shire.

  • Insurance considerations - public liability If you are selling in a public place

  • Time - Direct sales can take far more time than supplying a merchant or market agent.

  • Marketing - You will need to let people know about your direct sales business.

  • Food Safety - If you intend to set up a stall at an established farmers market, you will be able to get relevant information on requirements for stallholders from the organisers of the market.

    For other types of direct outlets, contact your local Council to find out about food safety regulations that affect you. Below are some general requirements:

It is all about the marketing! If you are good at it, direct sales can make more money, but it is a different type of business...

Acknowledgements :
This case study has been facilitated by Horticulture Australia Limited (HAL), in partnership with AUSVEG, through the National Vegetable Research and Development Levy. The Australian Government provides matched funding for all HAL’s R&D activities.

Disclaimer :
This business case was produced and edited by RMCG (ph: 03-9882-2670). RMCG produces these business cases with the expectation that users exercise their own skill and care with respect to its use. Before relying on or altering any business practices, users should carefully evaluate the accuracy and relevance of the information for their purpose and should obtain appropriate professional advice relevant to their particular circumstances.

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July 2015

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