Bamka, W., Agricultural Agent/Associate Professor, Rutgers Cooperative Extension
Komar, S., Agricultural Agent/Associate Professor, Rutgers Cooperative Extension
Schilling, B. , Director of Extension, Rutgers Cooperative Extension
Infante-Casella, M. , Agricultural Agent/Professor, Rutgers Cooperative Extension
Melendez, M. , Agricultural Agent/Assistant Professor, Rutgers Cooperative Extension

ABSTRACT

Case-study assessments were conducted to evaluate challenges facing direct marketing operations in New Jersey. Rutgers Cooperative Extension faculty, with agricultural marketing expertise, performed on-farm assessments for multiple aspects of on-farm direct marketing enterprises. A Strengths, Weaknesses, Opportunities and Threats (SWOT) method was used to independently assess 10 farms offering on-farm direct marketing to the public. Observations from assessments revealed similar resource needs among operators. In response to data collected, Extension faculty developed educational resources and assessment tools to address programmatic deficiencies. Extension interactions with farmers and assessing stakeholder needs can often result in effective Extension programming and resource development.

INTRODUCTION

Economic pressures have encouraged many U.S. farm families to explore options for expanding farm revenue through various product or market diversification strategies (Vogel, 2012). Innovative on-farm direct marketing strategies have become a particularly attractive form of alternative agricultural enterprise. This is most true for farmers who can capitalize on close proximity to large populations with high per-capita incomes. Small farms have been particularly inclined to engage in direct marketing activities as a strategy to mitigate high operating costs, high land costs, urbanization pressures, and difficulties competing in global wholesale markets.

 

An estimated 21% of New Jersey’s farms offer some form of on-farm direct marketing or agritourism (Schilling et al., 2012). The state’s farmers earned more than $51.7 million from direct to consumer sales and agritourism activities in 2012 (USDA-NASS, 2014). New Jersey ranks 40^th among all states in terms of total farm sales according to the 2012 Census of Agriculture; however, it ranks 12^th in direct marketing sales. More detailed analysis of census data further reveals that 12 of the 21 New Jersey counties rank in the top 10 percent of the nation’s 2,826 counties with direct marketing sales. New Jersey also ranks 6^th in agritourism revenue.

 

On-farm direct marketing operations have developed new strategies beyond sales of farm-grown products. The inclusion of recreational and educational activities, popularly called agritourism, has surged because of the potential for producers to expand the use and returns from existing farm assets with little new capital investment (Barbieri, 2013; Nickerson, Black, and McCool, 2001; Schilling, Attavanich and Jin, 2014). These types of farm adaptations capitalize on the increasingly broad base of consumer interest in the benefits perceived in local food systems (Low et al., 2015; Martinez et al., 2010).

 

Although there are many perceived benefits of on-farm direct marketing, there may be obstacles to overcome in order to make a successful operation. While established literature examines the process and challenges associated with agricultural technology innovation, such barriers in agricultural marketing are arguably less chronicled. While technological innovations in agriculture often have roots in the scientific and academic communities (frequently in partnership with farmers), we posit that agricultural marketing innovations tend to evolve more organically within the farming community. It follows that Extension personnel may need to play “catch up” with farmers to understand the evolution of marketing strategies before being in a position to develop educational resources based on clientele needs. Relative to the traditional production-wholesale model of operation, direct marketing is a new business paradigm for many farmers that may present new business challenges (e.g., marketing and promotion, the need for new employee skills, liability exposure, regulatory investigations, and reorientation of managerial efforts). A team of Rutgers Cooperative Extension faculty therefore conducted case-study research involving New Jersey farms engaged in a broad range of innovative direct marketing activities to identify specific educational and resource needs of this dynamic industry.

 

METHODS

 

Ten New Jersey based on-farm direct-marketing operations were assessed by a team of Rutgers Cooperative Extension faculty with expertise related to agritourism, crop production, marketing, business development, farm safety, food safety and agricultural policy. The mean experience in Extension or other agricultural service provider capacities among evaluators was approximately 20 years. This study was conducted under the proposition that engagement in novel forms of direct marketing, may pose new challenges to marketers operating on the cutting edge of the industry and may reveal additional educational resource needs. By studying innovative agricultural businesses using Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis, the team examined farms offering on-farm direct marketing to the public. One objective of this study was to identify critical challenges facing innovative on-farm direct marketing operations that could potentially hinder further enterprise development. These assessment activities were conducted to identify programmatic deficiencies related to agritourism and direct marketing operations and to develop Extension educational resources to mitigate these deficiencies.

 

FARM SELECTION

 

The 5-person assessment team relied on its collective experience in the state’s agriculture industry to develop a list of prospective farm cases. The list was augmented through consultations with Extension colleagues and other agricultural service providers, as well as through referral sampling approval (i.e., recommendations of farmers interviewed early in the research process). Final case selection was based on a systematic review and normative assessment of each farm’s marketing practices by the study team. The team also considered secondary factors, including farm size, production methods, length of operation, and operator characteristics, to ensure diversity among cases.

 

DESCRIPTION OF CASE STUDY FARMS

 

All case-study farm descriptions are listed in Table 1. Every farm offered some form of on-farm direct marketing with agricultural products grown on the farm. Seven different counties in New Jersey were represented from the 10 case study farms. All farms, except one farm, were located in a suburban/semi-rural area. Selected farms ranged in size from multiple garden plots of less than one acre to 250 acres and produced varied crops or livestock under diverse management methods and marketing strategies.

 

Table 1. Summary of Case Study Farms.

Farm Case Number	Farm Size	Types of Production	Direct Marketing Activities
1	97 acres	hay, laying hens, rental pastures for horses	farm market, agritourism
2	250 acres	vegetables, fruit, eggs, flowers	farm market, agritourism
3	65 acres	vegetables, fruit, flowers, beef	farm market, agritourism
4	200 acres	vegetables, fruit, wine grapes,	farm market, agritourism, winery, bakery
5	54 acres	vegetables, fruit, turkeys	farm market, pick-your-own, pre-order turkeys
6	200 acres	vegetables, small fruit, hazelnuts, honeybees	farm market, pick-your-own
7	80 acres	vegetables, small fruits, cut flowers	farm market, community supported agriculture (CSA) memberships, pick-your-own
8*	13 residential garden plots	vegetables	CSA memberships
9	200 acres	vegetables, small fruit, popcorn, Christmas trees	farm market, CSA memberships, pick-your-own
10	100 acres	rye, barley, hops, pumpkins, hot peppers, herbs	farm brewery retail market

* This unique case-study farm utilized a small plot intensive farming (SPIN) method for production.

 

FARM ASSESSMENT

 

Prior to each farm visit, assessment team members reviewed general farm background information obtained from the farm’s website or social media, as well as through consultation with the farm operator. To maintain consistency across case-study farms, each assessor was trained to use the United States Department of Agriculture’s guide, SWOT analysis: a tool for making better business decisions. SWOT analysis is commonly used business management tool used to identify an enterprise’s strengths, weaknesses, opportunities and threats. Strengths and weaknesses are internal issues of a business that may be changed by the owner or operator, while opportunities and threats are often external influences. The use of the USDA’s SWOT assessment template allowed each team member to independently assess the operation, while providing a defined assessment procedure. The combination of a structured assessment with independent inquiry allowed for collection of data without any bias based on other evaluators’ input. All farms in the study were asked the same set of questions prior to the assessment team visits. Questions specific to the following topic areas were asked of each farm operation to determine strengths and weaknesses:  farm location, acreage, facilities, equipment, signage, products, marketing type/strategies, leadership roles, employees, business plan, insurance, finances, and environment. To assess opportunities and threats of the farm, questions were asked and assessments made pertaining to the following:  neighbors/surrounding population, regulations, customers, economy, weather, traffic, municipal government relationships, agricultural suppliers, and agricultural assistance programs.

 

Each farm visit and assessment lasted approximately 5 hours. The first phase was an initial group discussion with the farm operator, followed by a farm tour led by the farm operator. When possible, farm tours were conducted during business hours. Throughout the farm tour, and during a subsequent interview session, members of the study team posed questions designed to elicit their perceptions of the operation’s strengths, weaknesses, opportunities, and threats. Toward the end of each farm visit, members of the study team walked individually through the farm to finalize their observations.

 

DATA ANALYSIS

 

Following each farm assessment visit, the study coordinator compiled the individual evaluator assessments. The evaluation team reconvened and discussed each farming operation using inductive analysis. The group discussed each operation independently to develop a composite assessment of each farming operation using the SWOT analysis factors to guide the discussion. Each SWOT category was evaluated as a group to isolate similarities across the farms evaluated. These similar factors were then refined based on further discussion. The issue or SWOT factors were then defined by the team and categorized into theme areas, representing particular concerns that were specific to each individual farm. Similarities were identified across all farms assessed. The SWOT factors were then defined by the team and categorized in an overall summary comprised of similar factors from all 10 farms.

 

RESOURCES DEVELOPED

 

The SWOT analysis format enabled Extension professionals to assess individual operations and to draw industry-wide assumptions about educational resource needs. One of the recognized benefits of this methodology was that it forced both Extension professionals and on-farm direct marketing/agritourism operators to systematically assess various aspects of individual operations and the industry as a whole. The results of this methodology led to the development of a series Extension publication checklists designed to augment the farm-level SWOT analysis. These checklists covered many of the areas recognized by the assessment team. The potential areas of concern included in the self-assessment checklists were: animal safety, emergency response and liability, employee assessment, operation food safety, general farm safety, marketing strategy, and parking and traffic. These tools were meant for farmers to utilize to reveal deficiencies in management to make adjustments.

 

In addition to creating detailed checklists, the Extension team provided farmers interested in conducting independent SWOT analysis for their operation, with a guide titled, “SWOT Analysis for On-Farm Direct Marketing Operations”. This self-assessment tool can be found at http://sare.rutgers.edu/pdfs/SWOT_Toolkit.pdf. These resources were shared via various educational programs including formal classroom delivery, web-based platforms and other delivery methods including webinars, videos and social media.

 

RESULTS AND DISCUSSION

 

The agricultural operations assessed during this study reflected both the diversity of agricultural innovation in New Jersey and provided representations of the unique challenges facing on-farm direct-marketing operations. Despite the variability of the observed operations (size, crops, production methods etc.), several commonalities were observed among the SWOT parameters compiled by the Rutgers Cooperative Extension study team (Figure 1).

 

Strengths          Educated/experienced farmers          Proximity to customers          Family support          Open space benefits	Weaknesses          labor shortage          lack of understanding legal risks          poor business plan development          limited access to resources          limited infrastructure
Opportunities           Increasing consumer demand           High population density           High consumer income           High growth opportunities	Threats liability exposure safety concerns theft and vandalism regulatory exposure

Figure 1. SWOT Analysis of Agritourism Operations.

 

STRENGTHS

 

Observed strengths of the operations assessed were wide ranging and determined to be a combination of personal and demographic factors. Most operations evaluated were in a region of the state with access to potential customers having relatively high per-capita incomes, customers who were well educated and in areas with high population densities. The farm operators were highly motivated, college-educated and experienced producers with already established farmland based businesses. All but 2 farms had secure land bases for production and marketing. These factors, coupled with a noted family support system, positioned these operations well to develop a successful on-farm direct marketing enterprise.

 

WEAKNESSES

 

Similarities among operational weaknesses were also observed. For example, many of the farms assessed did not develop thorough business plans, resulting in poor management, lack of planning for generational business transition, staffing shortages, and limited enterprise budgeting analysis. Perhaps the most common weakness observed was a lack of understanding of liability risks associated with on-farm activities and limited development of risk mitigation strategies. Operational deficiencies were also common ranging from poor directional and informational signage, lack of overall communication and insufficient customer control measures. When questioned regarding the identified shortcomings, producers were often unaware of the issues or revealed they had limited access to resources needed to correct the weaknesses.

 

OPPORTUNITIES

 

The state of New Jersey is situated within the most densely populated regions in the country. More than 30 million people (with an aggregate personal income of $1.3 Trillion) reside within 100 miles of the state’s center. This high population of relatively wealthy consumers represents one of the largest opportunities shared by most on-farm direct marketing operators. Changing consumer preferences, including the locavore movement, farm-to-table marketing and a desire to eat healthy and freshly grown foods have all led to increased opportunities for New Jersey’s diverse agribusinesses. Consumer demand for local products, nearby family entertainment and activities has also created new opportunities for on-farm direct marketing and agritourism venues from regional metropolitan areas. These opportunities were, in large part, the driving criteria for producers entering an on-farm direct marketing and/or agritourism venture. Although producers appeared to understand the potential opportunities for on-farm direct marketing, limited access to resources on how to manage customers on farms and managing a new business model was evident.

 

THREATS

 

Although on-farm direct marketing enterprises can present significant opportunities for many New Jersey farms, this business model may also represent an entirely new set of threats compared to a traditional production-centric operation. One of the most frequently recognized threats observed during the farm assessments focused on the new, often unrecognized risks. An especially important concern raised was opening a farm to the public elevated safety concerns, leading to increased liability exposure. Another threat to the on-farm direct marketing/agritourism operator was regulatory compliance. In many instances, existing regulations did not include on-farm public activities resulting in either overly burdensome or nonexistent regulations, resulting in compliance issues for the producer. Since on-farm direct marketing and/or agritourism was often a new enterprise or an additional component for successive generations of farm families, the lack of access to resources and expertise to reduce risk exposure was evident to the Extension team.

 

CONCLUSIONS

 

On-farm direct marketing operations may have different business models and yet still have similar strengths, weaknesses, opportunities and threats. Using a case-study method across multiple farms with on-farm direct marketing and/or agritourism activities, revealed many similarities and resource needs for operations. These findings prompted new Extension programming and educational resources for clientele. Many of these resource needs were not traditionally addressed by previous Extension programming efforts, and in many instances, the needs were not recognized by the farm operators. Through cooperation with farm operators and Extension professionals, this farm assessment study concluded to develop Extension resources to assist farmers to begin or expand their on-farm direct marketing/agritourism enterprises with the necessary tools for planning and assessment.

 

REFERENCES

 

Barbieri, C. (2013). Assessing the sustainability of agritourism in the US: A comparison between agritourism and other farm entrepreneurial ventures. Journal of Sustainable Tourism, 21(2), 252–270.  doi:10.1080/09669582.2012.685174

Low, S.A., Adalja, A., Beaulieu, E., Key, N., Martinez, S., Melton, A., Perez, A., Ralston, K., Stewart, H., Suttles, S., Vogel, S., & Jablonski, B.B.R. (2015). Trends in U.S. local and regional food systems (Economic Research Service Administrative Publication No. 068). Washington, D.C.: United States Department of Agriculture, Economic Research Service.

Martinez, S., Hand, M., Da Pra, M., Pollack, S., Ralston, K., Smith, T., Vogel, S., Clark, S., Lohr, L., Low, S., & Newman, C. (2010). Local food systems: Concepts, impacts, and issues (ERS Research Report No. 97). Washington, D.C.: United States Department of Agriculture, Economic Research Service.

Nickerson, N., Black, R., & McCool, S. (2001). Agritourism: Motivations behind farm/ranch business diversification. Journal of Travel Research, 40(1), 19–26. http://dx.doi.org/10.1177/004728750104000104

Schilling, B., Attavanich, A., & Jin, Y. (2014). Does agritourism enhance farm profitability? Journal of Agricultural and Resource Economics 39(1), 69-87.

Schilling, B., Sullivan, K. & Komar, S. (2012). Examining the economic benefits of agritourism: The case of New Jersey. Journal of Agriculture, Food Systems and Community Development 3(1):199-214.  http://dx.doi.org/10.5304/jafscd.2012.031.011, pp. 199–214

United States Department of Agriculture.  SWOT analysis: a tool for making better business decisions. Retrieved from http://www.rma.usda.gov/pubs/2011/swot_brochure.pdf

U.S. Department of Agriculture, National Agricultural Statistics Service. (2014). Washington, D.C.: USDA, NASS. 2012 Census of agriculture, U.S. summary and state reports. Retrieved from http://www.agcensus. usda.gov/Publications/2012/ 

Vogel, S. (2012). Multi-enterprising farm households: the importance of their alternative business ventures in the rural economy (ERS Economic Information Bulletin No. 101). Washington, D.C.: United States Department of Agriculture, Economic Research Service.

 

ACKNOWLEDGEMENTS

 

Funding for this study was awarded by the USDA Northeast Sustainable Agriculture Research and Education program under project number NENJ14-001.

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