Comment: Farmers as price makers instead of price takers

When their buyer said their produce was too expensive, this farm business changed the conversation

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Farmers are conditioned to see themselves as price-takers. They take the price that is charged for their fertilizer and seed and they take the price that’s offered for their production.

But as one of the speakers at the recent Summit on Climate Action in Food Systems in Kelowna illustrated, it’s possible to overcome the “lowest price is the law” psyche.

Gillian Flies and her partner Brent Preston grow vegetables, mainly hand-cut seasonal greens, on a 20-acre farm about 1.5 hours north of Toronto.

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New Farm started as a certified organic operation. Over time, their system expanded to include regenerative agriculture practices that ensure they sequester carbon and build soil health on their land. They outgrew selling through farmers markets and began working with a wholesale distributor.

Some of those regenerative practices such as eliminating tillage are also acknowledged as key to mitigating the effects of climate change.

Three years ago, they connected with the Toronto-based iQ Foods, a fast-casual restaurant chain trying to expand its offering of local, organic produce. Before long they were supplying 200 pounds of greens per week and there were plans for continued expansion.

Flies said New Farm purchased seed, prepared their seedbed, and ensured they had enough staff ready for the challenge. In February 2018, they got a phone call saying the deal was off.

“Their investors were upset because their food costs — they thought were off the charts. They said they were sorry but they were not going to be purchasing our product for the season,” she said.

Flies described their dilemma as having two options: find other customers or convince this customer their lettuce was worth paying for. Interestingly, the obvious option, which would have been to drop their price, wasn’t part of the discussion.

Flies went to Toronto to meet with the restaurant owner and his chef. She convinced them the issue was bigger than the cost of food.

“Instead of talking about food, I talked about climate change,” she says. “That’s something we can all relate to. It takes it outside the discussion of food cost and talks about the other intangible costs in food currencies other than financial.”

What emerged was an opportunity for the restaurant to differentiate itself in the marketplace and for New Farm to keep an important contract.

“I said ‘maybe you could instead of putting (the cost) all onto food costs, move some into a marketing budget and be a leader in this — get out ahead of this curve,’” she said.

Behavioural science suggests young people in particular are especially concerned about the environment and climate change, but feel helpless and overwhelmed by its magnitude.

Studies have shown millennial consumers are also more likely to spend more of their food dollar eating out. They support more artisanal and organic options as well.

“So giving people the opportunity to walk in, care for their health and at the same time make a difference and tangibly be able to pay for a product that they know is regenerating the soil and mitigating climate change was a great idea,” Flies said.

But in keeping with the goal of empowering consumers, the restaurant didn’t just raise the prices on the menu and then offer an explanation.

It gave customers a choice, not to pay more — but to pay less. The New Farm greens were a part of every menu item, so customers were going to get them whether they wanted to pay for them or not.

“Every time someone went to the counter, they were asked if they wanted to pay 50 cents less, or the suggested price,” Flies said.

They implemented a marketing campaign that involved the hashtags “Solve it with Salad” and “Bigger than Food.”

Eighty-five per cent of customers opted in. New Farm’s sales of hand-cut organic regenerative greens jumped to 500 pounds a week, and other restaurants are now interested in joining the campaign.

In another twist, rather than viewing this as competition, the original restaurant is willing to help other food suppliers implement the “Solve it with salad” campaign.

That’s a pretty clear acknowledgement that this is bigger than food.

About the author

Vice-president of content

Laura Rance

Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at [email protected].

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