Study: Direct-marketers create more jobs in their own regions

Danielle Lovato (right) of Sacramento offers tastings and sells bottles of olive oil for the Sacramento-based Maltese Olive Oil Co. at a farmers' market July 23 in Elk Grove, Calif. A University of California-Davis study found that farms that market directly to their customers create more jobs locally.

DAVIS, Calif. — Farms that market their goods directly to consumers tend to create more jobs in their own regions than those that don’t, a university study has found.

For every $1 million worth of output, farms that sell directly via farmers’ markets, produce stands, community-supported agriculture and other such outlets generated nearly 32 jobs in the Sacramento area, according to the study led by University of California-Davis researcher Shermaine Hardesty.

In contrast, non-direct marketers created only 10.5 local jobs for each $1 million in output, the study found.

“I was hearing a lot of ... consumers and leaders in local food markets saying that they buy locally produced foods because it supports the local economy,” said Hardesty, a Cooperative Extension agricultural economist in UC-Davis’ Department of Agriculture and Resource Economics.

“I was saying, ‘Is this true?’” Hardesty said. “That began a three-year journey.”

It’s not that more conventional producers don’t create jobs; it’s that the jobs that serve them tend to be more far-flung. Direct marketers in Hardesty’s study purchased 89 percent of their inputs within the region while the non-direct marketers purchased 45 percent of their inputs locally.

Hardesty’s team interviewed 88 farmers and ranchers in Sacramento, Yolo, Placer and El Dorado counties, getting details about what they spent on different items and where they sold their production.

A key difference was in labor costs, Hardesty said. Direct-marketing farms spent an average of 45 percent of their operating expenses on labor, while statistics have shown conventional growers spend about 25 percent of their budgets on labor, she said.

Among those local workers is Danielle Lovato of Sacramento, who was operating a booth for the Sacramento-based Maltese Olive Oil Co. at a farmers’ market July 23 in Elk Grove, Calif.

“I love it,” Lovato told the Capital Press. “It’s great. We meet so many cool people. It’s a lot more personable than just going to the grocery store. You’re more in touch with the food that you’re getting.”

Many farms market both directly and through wholesalers — 73 percent in Hardesty’s study. For instance, growers Jeff and Carolyn McCormack of Elk Grove sell their pears at farmers’ markets and to a packing house in Lodi, Calif.

“We sell commercially, too, to stay ahead of the game and make the money to lease our ranches,” Carolyn McCormack said. At farmers’ markets, “I think people learn from the farmers” about their production methods, she said.

Overall, Sacramento region direct-marketers averaged just $164,631 in sales in one year compared to $568,105 for those not engaged in direct marketing, the study found.

Some direct-marketers have said returns can start to diminish if they get too big, but Hardesty believes there’s still room for growth within the niche. While some growers are limited in terms of acreage, others could expand their sales considerably without adding much acreage, she said.

“There’s a sentiment that smaller-scale local producers are not taken very seriously,” she said. “That was another reason for doing the study, to say, ‘Is there something that policymakers could use to understand this sector of agriculture more?’”

While the growth potential of the customer base can hit a ceiling in terms of finding consumers “interested in less convenient food,” Hardesty said she’d like to see more locally grown food placed in grocery stores and restaurants.

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