Sunday, 24 August 2008

Farm Shops - The Good, the OK, and the Truly Terrible

There's been an explosion in the number of farm shops opened recently. FARMA, (National Farmers' Retail and Markets Association) reckons there are now over 1000 in total, and a recent article in the Telegraph suggested that the number is 1796, having increased by 15% in the last twelve months. In Scotland a survey by the Scottish Agricultural Organisation Society found that sales through farm shops are growing by 15-20% per annum, that numbers here increased by 15% in the last year, and that there are now 120 in total north of the border. Signs advertising farm shops seem to be springing up by the side of the road on an almost weekly basis. A survey for DEFRA, published November 2007, says that 12% of people shop at least once a month at a farm shop or farmers' market, compared with 8% doing their grocery shop over the internet, and 31% buying from specialist shops such as butchers and greengrocers.

The reasons for farmers diversifying into activities like farm shops are easy to understand, as they search for ways of earning more for their produce. Research about why consumers are visiting farm shops range from the urge to support local businesses and farmers, to a wish to be very sure about the treatment of animals and a health worry about what exactly goes into their food. There is also a theory that they want to find something a bit different from usual supermarket produce. With the current pressure on expenditure though , it could be that people are now prepared to trade their finer feelings for cheap prices and savings on petrol by doing just one supermarket shop.

So over the weekend I began a series of visits around Warwicks, Worcestershire, and Herefordshire to discover what is going in the farm shop market. And what started as an exploration of how they are faring ended in crushing disappointment at the quality of the shopping experience.

Often the basics of cleanliness and tidyness were lacking - dirty shelves, dirty fridges, dirty floors, dirty windows. Sadly, one outlet, trying very hard with its range of products which included home made ready meals, and meat and poultry reared on the farm, had not thought to cut back the weeds and nettles which surrounded the shop, or to water their drooping hanging baskets, giving an impression of total neglect.

Product quality was often a disgrace. Who wants to have travelled miles to find mouldy strawberries, wilting leeks, yellowing cabbage, cauliflower with black spots, carrots caked in dried mud, and badly vacuum packed meat lying in a pool of blood.

The range of products was often poor, even at this time of year when a vast variety of produce is available in maximum abundance. Few had made the effort to source local food. No consumer is going to return if the shop sells what can be got at a supermarket, often of better quality and cheaper.

Hardly surprising therefore that 8 out of the 10 shops I visited had no other customers and one had just one other.

There is though a shining beacon showing how farm shops can be attractive places to shop.I stumbled on Hillers Farm shop just outside Alcester. It was full of people laden with with overflowing baskets and even trolleys. Yes, it is big. It offers meat, fish, dairy, bakery, a cheese counter, wine, and fruit and veg. What makes it work though could be applied to any shop whether big or small. The quality of produce is outstanding, as is the variety. Indigeneous British fruit and veg is sourced either from the farm itself or, from farms literally just up the road.The origin of the food is clearly labelled either Hillers, or the name of the farmer and his exact location like "just next door", or "3 miles up the road". There is wide variety. Fruit ranged from redcurrants to rasperries, strawberries, blackberries,and apples, all from nearby.There are exotic lettuces, and different types of tomatoes. The cheese counter had local cheeses, and the bakery a range of different breads. The meat and chicken were all local, mostly packed in tray and film. The shop was spotless, the staff welcoming, knowledgable, and in clean uniforms.

The shop visits don't tell us whether the current financial climate is impacting farm shop turnover, although the Hillers experience would suggest that the best ones are holding up. What the visits do say is that some people are cynically exploiting consumers' favourable attitudes to farmers by flinging up a sign saying farm shop, and then selling rubbish products . This does farmers and farming no good whatsoever at a time when public support is vital.

Monday, 11 August 2008

A Shift to Thrift - Organic Sales Well Down, Red Meat Not Far Behind

Whether its Gordon Brown telling us not to waste food, a general belt tightening in an effort to pay the bills, or more questioning of the value of what we buy, there is a definite change in consumer buying habits.

A well publicised example of the shift to thrift comes in the shape of Tesco's decision to reduce the price of many organic lines. Their press release quotes TNS saying that demand for organic produce across all retailers has dropped by 8.1% in the last three months. Tesco says that many people would like to buy organic but won't pay the premium. So it has cut the price of new potatoes and carrots by 20%, broccoli and asparagus by 25%,avocados by 13%, mixed peppers by 12%, leeks by 11% and courgettes by 5%.

Next, red meat. In the 12 weeks to June 15th, according to TNS figures published by the British Pig Executive, volume sales of beef, lamb and pork dropped by 4.7% in volume compared with last year. What seems to be happening is that fewer people are buying red meat on a regular basis, and those that do buy are buying smaller amounts. Worst hit is lamb, down 12%, followed by beef down 4% and pork down 1%. Lamb of course is the most expensive red meat, and pork the cheapest on a per kilo basis. Sausages are the only red meat product showing any growth, and then by only 1%. The shift to thrift is clear in the type of cuts bought, with a marked trend to minced and stewing beef and lamb, pork belly, and pork shoulder. On the other hand, sales of roasting joints are well down, and even convenient cuts like chops and steaks are selling less than last year.

The shift is happening in even the smartest places. Waitrose have reported a 55% increase in sales of free range chicken legs and thighs, compared with 10% for significantly dearer chicken breasts.

On dairy, the figures are less startling. DairyCo data for the year to July 2008 shows that liquid milk sales have started to fall back gradually, and are now at their lowest since September 2007. Its unlikely that people are using less milk, rather that they are being careful on date codes and throwing less away. All growth has gone from organic milk, possibly as consumers question the premium paid, and sales are now drifting slowly down.

On a brighter note, total cheese sales are up by 1%, but odd things are happening. The super-premium cheddar cheeses are forging ahead. At the other end of the scale, supermarkets' value cheddars are also growing. There is a trend to buying brands rather than own label cheeses, probably because the price difference between the two is now an average of 14p per kilo when a year ago it was 29p.

Some of the changes in what consumers buy are predictable, the drop in some organic sales for example, and the switch to brands when there is not much price difference with own label, and the move to buying cheaper cuts of meat.

But a nearly 5% decline in total red meat sales is alarming, and is the direct result of major price hikes in shops.

The next few months will be tricky for livestock. Consumer demand is falling, we are heading into a period of heavy supply, and seemingly the euro is weakening which could dampen export sales. As ever, supermarkets will be forcing the pace. The red meat market is important for them, and they will be evaluating their strategies carefully. Will they lower prices in their stores to boost sales, or keep prices up? Tesco's milk price reduction today probably shows the way. Prices will come down. But who will ultimately fund the fall? Hopefully the number crunchers at the NFU, DEFRA, EBLEX, BPEX and the livestock associations are keeping close tabs on the percentage of retail price going into farmgate prices. And will complain long and loudly if farmers are getting a worse deal.