Expanding and Diversifying Your Agribusiness
October 25, 2022
What makes your business different than everybody else? Why should I shop here versus somewhere else? What sets this product apart? Often, these are the questions every entrepreneur is asked as they are starting out. For most folks, these can be easily answered as well. The path to wide success in bringing a product to market usually includes some kind of differentiation, something that disrupts the market and moves you to the forefront. Things like Amazon, that completely changed ecommerce, to something like the Scrub Daddy, completely changing the world of sponges, are examples of market differentiation that made it to the big time. But how can we do that with agriculture?
The answer to that question is often not an easy one. Since agriculture encompasses so many fields, it can be difficult to find what sets you apart. When you look at the resources available to help you start a business, the first thing you will see is how to identify a problem, and then figure out a way to fix it. However, this doesn’t always work with food. When working in agriculture, we may have to get more creative with our line of thinking. Instead of looking for problems, we may have to look for gaps in the market. Instead of finding a new way to produce something, we continue to build upon our strengths and get better at what we do. If we can’t control our prices, look at ways to trim costs, or bring something different to the table.
Identifying gaps in the market is one of the easiest ways to expand and diversify your business. If you are a regular vendor at farmers markets, be sure to listen to your customers. Watch the crowd, you may be able to see a group of people looking for a product, but they can’t find it. Find out what they are looking for, It could be something that you can add to your offerings. This creates a win-win situation for everyone, people find what they want, and you get to make more on your bottom line.
Building up your strengths is a great strategy as well. For instance, if you are excellent at growing tomatoes, there’s no shame in being known as the tomato people. Having a reputation of high quality and flavor solidifies your space in the market, and helps give you more control over your prices. Now, by no means is this a strategy to hold on to forever, as you will still have to keep market forces in mind. Diversification of your farm enterprise is always a good idea, as it mitigates risk across your operation. If you dedicate all your time to wonderful tomatoes, only to lose the crop to a blight, you don’t have any other products to fall back on.
For livestock and grain producers, finding a niche and setting your own prices is often not possible. While there are instances of this working, it can be very difficult to create a market for a heritage breed, or a different kind of grain. Often, folks in these fields look to trimming costs and staying aware of market forces in order to keeps things positive. Staying in tune with the market is a huge help, as you may find a particular crop that could be worth more in the next growing season, especially if your equipment will plant and harvest that crop. Creating your niche in this market can be expensive as well. Stock for your breed or specific seed often come at a higher price point. In addition, your customer may not know the benefits of your product, adding another cost to your operation in the form of education.
Picking just one of these strategies may not be the best solution to finding your place in the market. In practice, many owners find themselves using a combination of all of these strategies. Many farmers market veterans will tell you that listening to your customer and being known as the “XYZ” people have helped them immensely in their journey. Any business person will tell you trimming costs is a key to success. While there is never a one size fits all solution to growing your farm business, the JCDA is here to help you along your journey. Feel free to reach out with questions and ideas, we would love to help!