Expanding Opportunities for Small-Scale Farms in the Specialty Food Market

Author: Larry Lev and Laurie Houston, Department of Applied Economics, Oregon State University

Publish Date: Winter 2019

Many small and medium-size farmers face difficulties in competing with larger producers in the production of bulk commodities. While some of these farms have found success by selling their fresh products through farm-direct and intermediated markets (such as sales to retailers and restaurants), those niches are quite limited. The specialty food industry provides an additional outlet opportunity for farm fresh products. The “Beyond Fresh and Direct” Project explored some of the opportunities and challenges that small and medium-size farms encounter when they seek to compete in the rapidly-growing specialty food marketplace and developed five fact sheets to highlight our key findings.

According to the Specialty Food Association (https://www.specialtyfood.com/) the sector consists of “Foods and beverages that exemplify quality and innovation, including artisanal, natural, and local products that are often made by small manufacturers, artisans, and entrepreneurs.” In 2015, total specialty food sales exceeded $120 billion and represented 14% of total food sales. Small and medium-size farmers can participate in this value-added sector in one of three ways – as ingredient suppliers to specialty food manufacturers, through the use of copackers, or as food manufacturers themselves.

Through surveys and interviews, we determined that many specialty manufacturers are interested in sourcing directly from smaller farmers. The key advantages that smaller farmers offer include quality assurance, traceability, reliability, and trust. Many of these benefits can be highlighted in marketing messages that carry farmer stories through to consumers. The challenges of sourcing from these farmers include assuring a year-round supply, higher cost, and meeting food safety standards.

The five fact sheets (Available here) that highlight our key findings and offer many examples are:

  • Benefits: How Can Sourcing Directly from Farmers Benefit Specialty Food Manufacturers?
  • Criteria: What Criteria Must You Meet to Sell to Specialty Food Manufacturers?
  • Connections: How Can Farmers and Specialty Food Manufacturers Connect?
  • Standards: What Standards Must You Meet to Supply Ingredients to Specialty Food Manufacturers?
  • Value Added: Should You Produce Your Own Specialty Food Products?

We also produced a 51-minute webinar that features a farmer and a manufacturer who currently participate in this sector. In this webinar, they discuss their experiences as they relate to these five fact sheets.