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Matching Farm Resources with Market Trends

Authors as Published

Tom Stanley, Extension Agent, Farm Business Management, Northern District. (stanleyt@vt.edu)

The diverse array of products produced on Virginia farms go into three general market outlets:  1) international commodity markets; 2) national/regional commodity markets; and 3) local markets.  All three of these markets are projected to offer new opportunities in the years and decades ahead.  In many areas of Virginia, patterns of land ownership, land tenure, and our proximity to markets will open new doors for farmers.

Research indicates that by 2050, the world’s population will grow from 6 billion to 9 billion people, our planet will have to produce 70 percent more food, and at the same time use scarce natural resources more efficiently due to the demands for water and energy.[1]  This implies a continued need for large scale, highly efficient production of staple food commodities for domestic and international trade.  Virginia’s topography, soil types, and pattern of land ownership imply opportunity to participate in this market is limited, with our primary agricultural product for export continuing to be poultry, tobacco, and grains.  On the other hand, Virginia is centrally located in the wealthiest (on a per capita basis) consumer market in the world where less than 10% of disposable income is spent on food.[2]  This implies Virginia farms have an opportunity to capture premiums in this regional/local market that are unavailable to farms in the Midwest or West.  Our dairy and poultry industries have long relied on this market advantage, and now many farmers are building a very positive reputation as a source for fresh-picked high-value perishable crops that are within a reasonable travel distance of major metropolitan areas.

This brings us to a third market that has gained significant attention in recent years and that is locally-grown farm products.  A very engaged and enthusiastic segment of the consumer market is sending very strong market signals demanding locally grown food products.  While the cost/benefit analysis of this system and the efficiencies with which food can be locally produced are debated by some, there appears to be a sustained demand for locally produced consumer-ready farm products.  Some even have debated how the term ‘local’ is defined.  I suggest that farmers not get bogged-down in such debates but rather start exploring and determining if entering the locally grown markets is feasible for their farm's business.

Most significantly, I believe the local markets are offering farms that have not traditionally grown fresh-picked produce an opportunity to experiment and learn about producing these crops.  For the farms that try, some will find their labor and other resources limit the extent to which they can participate in these markets and, for others, these markets will provide a profitable means to sell welcomed ‘local’ products in nearby metropolitan areas.

Probably the greatest barrier to entry in this market will be the availability of labor on farms.  Fresh-picked consumer-ready produce is labor intensive and many farms do not have the labor force to grow vegetables or fruits on a large scale.  However, as area farmers have experimented with these crops and begun exploring markets, some have pooled resources or learned about crops that match their available labor.

Since 2007 Virginia farmers have experienced a jarring roller coaster ride of prices in the traditional commodity markets.  Many of these farmers are more deeply concerned than ever about the sustainability of profitable farming.  I contend that despite all the difficulties the world’s increasing demand for food will open great opportunities for Virginia farmers, both for those that achieve the efficiencies necessary to produce our traditional commodities and for farms that are willing to explore different crops and markets allowing for creative use of their land, capital, and labor resources.

[1] Economic Research Service, USDA, 2009
[2] World Food and Agriculture Organization, Rome, 2009

Rights


Virginia Cooperative Extension materials are available for public use, re-print, or citation without further permission, provided the use includes credit to the author and to Virginia Cooperative Extension, Virginia Tech, and Virginia State University.

Publisher

Issued in furtherance of Cooperative Extension work, Virginia Polytechnic Institute and State University, Virginia State University, and the U.S. Department of Agriculture cooperating. Alan L. Grant, Dean, College of Agriculture and Life Sciences; Edwin J. Jones, Director, Virginia Cooperative Extension, Virginia Tech, Blacksburg; Jewel E. Hairston, Administrator, 1890 Extension Program, Virginia State, Petersburg.

Date

April 8, 2011