Episode 16 - Growing Beyond Direct Sales: Preparing for Wholesale Success

In this episode, host Ahlishia Shipley talks with Dr. Tim Woods, Agricultural Economics Professor and State Extension Specialist for Agribusiness Marketing at the University of Kentucky, about preparing farm businesses for larger market opportunities. Dr. Woods discusses when producers should consider expanding beyond direct-to-consumer sales, what wholesale buyers expect, and the communication strategies needed for long-term success. He also shares how the MarketReady program helps producers confidently prepare to sell to restaurants, grocery stores, schools, distributors, and other wholesale markets. Whether you're considering your next marketing opportunity or looking to strengthen your farm business, this episode offers practical insights to help you grow strategically.

Check out the MarketReady Producer Training Program for more tips and resources. 

Transcript

Ahlishia Shipley 0:01 

Welcome to the FARM Champion Podcast, where we connect farmers, ranchers, and agriculture professionals with the people, programs, and practical strategies that strengthen farm resilience and long-term success. Today, we're talking about an opportunity, which is expanding beyond direct-to-consumer sales and into larger markets like grocery stores and restaurants and schools and food distributors. To unpack that today is our guest, Dr. Tim Woods, who is a professor and extension marketing specialist with the University of Kentucky and creator of the nationally recognized Market Ready Program. It's great to have you here today with us, Dr. Woods. 

Dr. Tim Woods 0:46 

Great. Thanks, Ahlishia, so glad to join you. 

Ahlishia Shipley 0:49 

So, before we dive into today's topic, I would love for our listeners to learn a bit more about you and what really led you to focus on your line of research and extension work. 

Dr. Tim Woods 1:04 

Yeah, thanks so much. Yeah, it's been a long journey. I've been here at the University of Kentucky for over 30 years and really kind of taking this journey alongside our many producers and farm entrepreneurs that have been exploring these different market channels themselves and watching how these different opportunities unfold for them. And I think any good extension professional learns how to adapt their program to see what some of the emerging needs are and how do you help those producers as they're thinking about moving forward. I've always had a strong conviction, especially working in ag economics, that marketing is a really, really important dimension for success. And I'm always on the lookout for marketing innovations and especially where there are opportunities to connect small farms into markets that might be either new to them or just new ways of collaborating. And it's really striking how many of those kinds of opportunities exist out there and to get farmers to work together with different kinds of buyers that themselves are looking to be kind of innovative in terms of the kind of products they're sourcing, how they're sharing those products back forward to the customers they're trying to deal with. It's an always moving supply chain with lots of new tools, lots of new expectations, lots of new opportunities. And I've just really always been kind of supercharged myself as I see producers have some interest in those things, super rewarding to see them develop some successes and to kind of expand their opportunities and to grow their farm business in ways that maybe none of us really could have imagined before they started. 

Ahlishia Shipley 2:41 

Right. You know, I can hear the enthusiasm in your voice when you talk about this. You love your work, right? 

Dr. Tim Woods 2:48 

Oh, it's great. I mean, it's just that I never get tired of hearing great stories and seeing opportunities. If we could do that over here, and cut, paste, adapt to either different farms or groups of farms or to regional markets. There's just a lot of innovation and creativity out there that I love being in the middle of all that. 

Ahlishia Shipley 3:09 

Well, wonderful. And so how does a producer know when it may be time to expand beyond that direct-to-consumer market? And what are some of the opportunities available there? 

Dr. Tim Woods 3:21 

Yeah, thanks, Ahlishia. That's a really important question. And it's something that we've seen over and over again where a lot of producers, especially if they're smaller, really focused on maybe a very localized market where they've had a lot of success with, in relationships with typical customers that they've had in a farmer's market. There's a lot of advantages in those direct-to-consumer spaces where you can control the relationship. You can communicate the value of the product, you can build that kind of long-term customer relationship much easier. And so that repeat sales, week after week, season after season, is easier to cultivate in those spaces. A lot of producers get drawn to the retail or better pricing models where they're not having to pay for another partner or an intermediary that's going to help distribute or package or move their product to more remote markets. So, there are a lot of advantages in that direct-to-consumer market space and lots of innovations. And still today, a lot of our very best producers that have developed a good brand and a good product have still maintained some element of direct-to-consumer marketing. They'll have a solid website where they're doing direct meat marketing or have a good CSA or are still active in the farmers market where they've got some of their loyal customers and still dabble some in that retail space. But what we've seen is producers are trying to grow their business, the opportunities to get their products out to other places and to other consumers that really value their product and are willing to pay for that product. It really is beneficial to have a partner, a marketing partner, a grocer, a restaurant. In Kentucky, we've had a really strong state branding program, our Kentucky Proud program, and that's been picked up in restaurants, in the grocery space, our on-farm retail markets and agritourism, on and on. It's one of the more well-recognized state brand programs that we have in the country. And so, what that means is that Kentuckians and all 120 counties are interested in local products. And it's created an opportunity for producers in one part of the state to look for ways to get their products out to a wider community. Could be dairy products, cheese or milk or yogurt products. It could be value-added products that come from produce or from meat products. We just see a lot of opportunities to get these products out to more consumers that value those products through a wider distribution network. And so, what we've tried to do then is to work with farmers on how do you do that? How do you find partners that are going to work with you to help expand your market catchment, your sort of geographic distribution area, and to try to look at those marketing partners not as adversaries or people that are going to come and take part of your margin, but truly as partners that you're going to work together to try to find ways to bring products that customers value out to their marketplaces, buying places, so that more people can get access to your meat products, your cheese products, your glass bottled fluid milk products that sell great at your local farmers market, but there's so much more opportunity to sell those products in a wider space. And so that's where we develop this market ready training program. And so, a training program that really helps to prepare producers that are wanting to grow beyond the direct-to-consumer market and give them best practices for how to sell into these commercial market spaces and really build that around what buyers are saying. These are the key business functions we need our producer, vendor partners to focus on. 

Ahlishia Shipley 7:09 

So, you talk about the Market Ready program. So, what made you develop that program? 

Dr. Tim Woods 7:15 

Yeah, well, it was really a need-based program where buyers were asking for this program. They saw a lot of interest from their customers in having more local products, but they were routinely running into difficulty with their vendors that weren't really prepared for working with a commercial partner. And whether it was, you know, direct-to-grocer delivery or even if they're moving at a little bit larger scale, working with a wholesaler or distributor, there are a lot of new kinds of business functions that a producer needs to start to take into account that may be new to them. So, how do I think about a serious invoicing system? So, not just having invoices, but how do I manage all these transactions that are going on with different buyers, with different products? How do I manage those data? How do I track when payments have been made, when payments have not been made, what products are selling better than others, and working with your buyer to develop that good kind of communication, thinking about packaging and quality assurance, insurance questions. How much do I need for product liability insurance? And every buyer is going to have a little bit different story about what their expectations are. But what we found was that most of the expectations and needs across these different buyers really fell in this kind of 16 core business functions. And at the top of the list, almost to each buyer that we interviewed, the number one thing was communication, communication, communication. You have to be in a place where you're going to be communicating with me as a buyer. And so having that partner relationship where you're talking with that buyer about packaging, you're talking with that buyer about a special merchandising event that might be coming up with the Fourth of July or Memorial Day or some kind of a special back-to-school event where you're going to have mini watermelons. Take your pick. But the more you can get into that kind of planning through communication and talking about here's the product we need, here's the quality, here's the volume that we're gonna need, here's how the delivery and logistics, there's a lot of planning that goes into those kinds of transactions. And to be able to communicate with those buyers about how to make that work needs to start early. And it's part of a long-term relationship that the buyers themselves are used to having these kinds of conversations with their other vendors. The thing that I try to communicate with our local producers is they have some unique products and unique opportunities other vendors don't have because they have these local products and buyers are looking for things in season with sweet corn or strawberries or early asparagus, you know, products that are going to come in seasonally that their customers are looking for. Let's plan for how we can together make a big splash in the marketplace with those things. And we've seen in Kentucky, we have an amazing restaurant program, this buy local program. And so, the restaurants themselves want to do a lot of the kind of storytelling and featuring farms that they're working with locally. They've got typically very strong social media spaces, but they need that kind of help and cooperation from the producer, vendor, supplier to do that storytelling. What's special about your product? When is it coming in? Tell me something interesting about why you produce this product on your farm or why you grow these particular heirloom beans or heirloom tomatoes. And there are a lot of great stories that are out there that the restaurant community really appreciates it, and the restaurant patron community really appreciates that. 

Ahlishia Shipley 10:41 

You know, what's interesting about what you shared is that it sounds like the relationships are still just vitally important there. 

Dr. Tim Woods 10:49 

Oh, absolutely. Yeah, they're hugely important. And I think in this modern era of social media and social communication, everybody's got their smartphone in place. Everybody's using QR codes to find things and to communicate things. There are rich, rich opportunities to do that kind of storytelling and to communicate the unique attributes of your product, the history and story about your farm, family, and the heritage connected with your product. You know, we've got so many great stories of success that we've worked with. You know, in Kentucky, one of our biggest drawing features, of course, is Mammoth Caves. And we've got a popcorn producer that did a really, really cool thing with their popcorn products where they're trying to communicate why do we produce organically? And so, they developed a really nice little QR code to be able to do that storytelling. Where if you scan that, it takes you to this little video of their farm and it shows it pans over to these caves that are located underneath their farm and their little friends of the bats that they're trying to be mindful of. And we share this space together, and this is why we're producing organic popcorn. And so, the person that's buying that product can see there's something more than just this generic popcorn brand A versus B. There's a really unique part of the story that I'm entering in purchasing that popcorn. I'm doing my little part to help save bats in the mammoth cave area. And so, yeah, stories like that, I think, are just really there's so many of them out there and working with our producers to try to do a better job with that. 

Ahlishia Shipley 12:20 

Yes. And, you know, I would certainly be compelled. I think a lot of consumers would just love to be connected to the product that they're buying, to the community, to the producer, and be a part of something larger. So, this Market Ready program has been in place for a number of years. So, I would love to hear if you could speak to success. 

Dr. Tim Woods 12:40 

Yeah, I mean, we've had so many success stories, and a lot of it is just already having a very entrepreneurial farmer that has a great product and some great ideas, and it's just giving them a little bit of direction and pointing them on how to connect with a particular buyer is really what we sort of see the role of the Market Ready program. Every producer is in a slightly different position in terms of kind of their readiness and understanding of what some of these key business functions look like. Packing may look different, labeling may look different, branding, social media, and storytelling. That's what makes these products kind of unique in the first place. It's going to be different from farm to farm. But the things that we've seen typically are where farmers and local food vendors really appreciate making that buyer connection in person. There's a little bit of fear and intimidation going to make that connection with a buyer, whether it's at a grocery store or even at a restaurant. And so, trying to do things where we'll bring in buyer panels and have the folks have opportunities to have some Q&A and hear from the buyers themselves. This isn't just Tim Woods saying we want local products, it's hearing from the buyers, this is what we're looking for, and this is why we need this product. And here's what we see as kind of opportunity. And they'll hear from the buyers about a lot of the things we will have talked about already in the market ready training, emphasized again in their particular context. We've done some things, you know, in more recent years. The market ready program has been in place now almost 15 years, delivered in over 18 states. But we continue to find new opportunities to try to help make that farmer buyer connection. You know, most recently we've had a very particular, I think, super innovative dimension of how to deliver the market ready stuff into the grocery space. That's working with our Kentucky Department of Ag folks and Kentucky Center for Ag and Rural Development here that does a lot of business planning stuff with our market ready team. And working then with our grocery buyers very specifically, where we'll have a panel of grocers. But what we also do as part of that is we're targeting folks that are a little bit more ready to move products into a grocery space and to have the buyers themselves actually evaluate the packaging and the products that these vendors are going to bring in. Yeah, some of it might be shelf stable, some of it, if it's not shelf stable, they'll just bring in the packaging. But the buyers will give an evaluation of this also would work great in our store. The price point would be about this. We really like this about your label. We think you could really improve this part about your label. Or this is a really mature product category, you're going to have some real challenges being successful here and just giving some really honest feedback on these kinds of products. And that's been a huge help. And we've seen a lot of successes there. And to be able to see folks that have gone through that kind of a program, heard from the buyers, the feedback that they've had there, get invited to be able to submit a sales sheet if they want to, if a buyer says, We love this product idea, send us a sales sheet. We'd like to go the next step to explore if we could do a trial on our store with your product. What's really rewarding then is to go to a food show that that grocer is putting on to see that vendor there with their product, handing out samples to people, and they're making steps to move into that store in a bigger and bigger way. Super rewarding. You know, ultimately, what you want to be able to do is to hand that relationship off to where the farmer or food vendor is comfortable enough with that buyer to ask questions, and they see the value of candid conversations about price, about packaging size, about a new recipe formulation, or some kind of ingredient that there might be some questions about. They can have that conversation with the buyer themselves. They don't need to go through the market ready program to translate that. But there's a lot to learn and a lot of opportunities for these farmers, and especially once they get some confidence with those first vendors, they're more confident going to talk to another restaurant or talk to another grocer. And I've got this worked out here. I'm not quite so intimidated to talk about price or about what I do for quality assurance or here's what my insurance program looks like. Success breeds success, you know. So, a buyer, if I could say I'm already selling my product to these buyers over here, it's much more likely to open a buyer as you're exploring some other opportunities. 

Ahlishia Shipley 17:10 

All of that sounds really exciting to me. And it sounds like you're not just preparing producers to prepare their product, but you're also preparing them to be great communicators and to establish great relationships. Thank you for sharing that. Before we close, I wanted to ask you if there is someone listening who may want to consider getting into this market, but may not know what's the first thing to do, besides going to your local extension office and seeing if they offer Market Ready. What is one kind of practical step that they could take? 

Dr. Tim Woods 17:50 

Yeah, we have tried to create our Market Ready website to be full of resources that new prospective farmer food business vendors can start to look at and checklists that are there, things to think about as you're going into that buyer conversation that can help prepare you to talk about things like insurance, for example. The Market Ready website is really organized around those 16 key business functions that buyers are saying this is what's really important to us. That's a great starting point. There are buyer testimonials and videos and example branding, packaging, other kinds of things that people can pick up on that website there. I would love to have folks have a look at that website, see if there are resources there that could be helpful. If there's something on there that they would like to see more of or that is missing, please reach out to me. I'd love to follow back with them. We have done train the trainer programs in 17 different states. And we are always happy to connect again back with some folks that either don't know where they can find that program locally or they want to adapt it or refresh it locally. Candidly, there have been some states where it's been quite a while since we've had a chance to go and do a program down there, and things have changed, opportunities have changed, tools and examples have changed where it would be helpful to get a refresh on some of that stuff. But reach out to myself. I've got my colleagues that are available there on that website as well to explore train the trainer opportunities. And we would love, especially whether it's in the extension community or lots of our other local food systems partners, to talk about how we can adapt the market ready resources to a local context. 

Ahlishia Shipley 19:36 

Dr. Woods, thank you so much for joining us today and sharing this other opportunity to explore in the marketplace where producers are really learned a lot and appreciated you just sharing so much about the work you've done and the resources that you've created. And so, to our listeners, if you want to learn more about the FARM Champion Network and explore additional resources that support farm business success and risk management, please visit agftap.org. There you can connect with a FARM Champion in your area and discover trusted tools and technical assistance designed to help you grow your agricultural operation. Thank you for listening to this episode of the FARM Champion Podcast. And remember to like and subscribe wherever you get your podcast. Until next time!