what strategies can small farmers use to better compete in a challenging market environment?

Small farmers are an integral part of society. They produce food, provide rural employment, and contribute to diversity in both ownership and societal structure. However, they are also faced with a number of struggles, particularly when it comes to market entry and competition with large-scale agribusiness.

To address these issues and maintain profitability, small farmers must be innovative and adaptive. This implies the use of “new” marketing strategies to protect their existing market share, and, if possible, expand it. There are three main types of new marketing strategies. They are as follows:

• Differentiation: providing a product that is clearly different from that which is offered by conventional producers. Conventional production can offer mass quantities of goods at a low price, but this is often at the expense of other desirable qualities or services.  This presents small farmers with an opportunity to fill identified market gaps. Differentiation can take the form of, for example, offering heirloom varieties or personalized service.

• Specialization: choosing a specific product or group of products and fine-tuning the production process to reduce costs. When specializing, it is essential not to fall into a low-value monoculture trap, as it will not prove economically or environmentally sustainable. Instead, specialization should focus on high-value products, e.g. berries which can be sold fresh, as jams or other processed products, and wine. Specialization may also take the form of vertical integration or functional upgrading. Vertical integration refers to the process of internalizing multiple steps of the production and distribution process. Functional upgrading refers to the introduction of a new, higher value product.

• Diversification: integrating different activities, processes, or methods to add value, e.g. growing several types of crops including some perennials and raising some dairy producing ruminants. In doing so, farmers are able to mitigate some risk in that the likelihood of total crop loss in the event of an inclement weather or pest event is reduced. Likewise, it can support biological diversity and support a more stable farm ecosystem. From a different perspective, diversification can take the form of services provided, e.g. partnering with local schools to provide educational opportunities or senior citizen centers to provide elderly care in exchange for low-impact assistance.

sources:

• Alberta Agriculture and Forestry. (2017) Farm Direct Marketing for Rural Producers.
• Fromm, I. (2007). Upgrading in Agricultural Value Chains: The Case of Small Producers in Honduras. GIGA Research Programme: Transformation in the Process of Globalisation.
• Mitchell, J., Coles, C., and Keane, J. (2009). Upgrading Along Value Chains: Strategies for Poverty Reduction in Latin America.
• Rosset, P. R. (1999). The Multiple Benefits and Functions of Small Farms. Food First The Institute for Food and Development Policy.