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Determining Marketing Mix with Market Channel Analysis

Mariah Beverly

Summary

Small or beginning producers are unique compared to commercial agriculture. Oftentimes, they produce multiple products as they are finding their niche. These products are also sold in many ways – farmers’ markets, roadside stands, and CSAs, to name a few. Some are profitable, and some aren’t. How do these producers determine which markets offer the best returns? One solution traditionally recommended is enterprise analysis. However, diversified producers often do not have detailed records by product. Instead, they have documentation for each specific market channel they utilize. For these producers, a market channel analysis is the best way to determine the markets that offer the best returns. The Center for Farm Financial Management (CFFM) developed a tool to evaluate the profitability of producers’ market channels. Producers who used this tool relayed how helpful the tool was in examining income and expenses by market channel. However, producers commented on the lack of ability to include the cost of production expenses by market channel. After receiving this feedback, CFFM redesigned the tool to include production costs by market channel. With this information, producers can get a more accurate picture of market channel profitability and focus on the opportunities with the highest returns. In this presentation, educators will learn about the importance of market channel analysis as a risk management strategy, how it differs from whole-farm or traditional crop and livestock enterprise analysis, and how to use the tool with producers to help them achieve their business goals and manage their farm’s risk.

Details

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